BRICS International Trading Strategy

by Simon J. Evenett

What trade policy strategy should the BRICS leaders adopt at their forthcoming summit in Ufa, Russia? In 2014, those leaders and their trade ministers focused on fostering commercial ties, establishing a New Development Bank, advocating steps at the WTO and cautioning that mega-regional free trade deals, such as the Trans-Pacific Partnership, should not harm non-members.

At a time when each of the BRICS’ exports are falling and when only India is expected to see faster economic growth in 2015 and 2016, this report argues that the trade strategy of the BRICS should be rethought. Greater attention should be paid to the unilateral actions taken by governments that limit imports and artificially inflate exports.

Using the latest data from the Global Trade Alert, this report shows that, on average, every day since the Global Crisis began the commercial interests of at least one BRICS nation have been harmed by the imposition of a foreign trade distortion.

Moreover, BRICS trade ministers may want to rethink the wisdom of their excusing protectionism imposed by developing countries on the grounds that their economies are deserving of 'special and differential treatment'. This report shows that 'only' a fifth of the trade distortions harming the BRICS were implemented by the leading industrialised countries. There isn’t much evidence of BRICS solidarity either, as one third of the hits to BRICS commercial interests come from other BRICS members.

The report recommends that the BRICS members show global leadership on protectionism by exercising restraint individually and collectively. This recommendation is backed up by a slew of data on related matters that may be of interest to trade policy analysts, scholars, journalists and international officials.

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GLOB L TR DE LERT

BR

ICS Trad

e Strategy: Tim

e for a R

ethin

k

BRICS Trade Strategy: Time for a Rethink

aCEPR Press

The BRICS Trade Strategy: Time for a Rethink

The 17th GTA Report

CEPR Press

Centre for Economic Policy Research77 Bastwick StreetLondonEC1V 3PZUK

Tel: +44 (0) 20 7183 8801Fax: +44 (0)20 7183 8820Email: [email protected]: www.cepr.org

© CEPR Press, 2015

The BRICS Trade Strategy: Time for a Rethink

The 17th GTA Report

By Simon J. Evenett

GLOB L TR DE LERT

aCEPR PRESS

About Global Trade Alert (GTA)Global Trade Alert provides information in real time on state measures taken during the current global economic downturn that are likely to discriminate against foreign commerce. Global Trade Alert is:

Independent: GTA is a policy-oriented and research initiative of the Centre for Economic Policy Research (CEPR), an independent academic and policy research think-tank based in London, UK. Simon J. Evenett, the co-director of CEPR’s International Trade and Regional Economics Programme, is the coordinator of the GTA.

Comprehensive: GTA complements and goes beyond the WTO, UNCTAD, and OECD’s monitoring initiatives by identifying those trading partners likely to be harmed by state measures. The GTA considers a broader range of policy instruments than other monitoring initiatives.

Accessible: The GTA website allows policy-makers, exporters, the media, and analysts to search the posted government measures by implementing country, by trading partners harmed, and by sector. Third parties can report suspicious state measures and governments have the right to reply to any of their measures listed on the website.

Transparent: The GTA website represents a major step forward in transparency of national policies, reporting not only the measures taken but identifies the implementing country, trading partners likely harmed, and product lines and sectors affected.

Timely: The up-to-date information and informed commentary provided by Global Trade Alert will facilitates assessments of whether the G20 pledge not to “repeat the historic mistakes of protectionism of previous eras” is met, and the bite of multilateral trade rules.

For further information, visit www.GlobalTradeAlert.org

About the Centre for Economic Policy Research (CEPR)The Centre for Economic Policy Research (CEPR) is a network of over 900 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. A registered charity since it was founded in 1983, CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society.

CEPR research may include views on policy, but the Trustees of the Centre do not give prior review to its publications. The opinions expressed in this report are those of the authors and not those of CEPR.

Chair of the Board Guillermo de la DehesaPresident Richard PortesDirector Richard BaldwinResearch Director Kevin Hjortshøj O’Rourke

Contents

Foreword vii

1. Executive Summary 1

Part One: Benchmarking the BRICS’ resort to protectionism and trade liberalisation

Charts for each BRICS nation 15

Maps for each BRICS nation 33

Part Two: BRICS commercial policy choices and global developments

2. The global landscape of protectionism 49

3. The commercial policy stance of the BRICS 61

4. The threat to LDC exports posed by the BRICS 81

Part Three: Crisis-era policy choice by and affecting the BRICS

Brazil 93China 95India 97Russian Federation 99South Africa 101

vii

Foreword

The term BRICS was coined by Jim O’Neill from Goldman Sachs over a decade ago. Unlike many acronyms, this one has stuck - largely because of the growing share of the world economy associated with the emerging economic powers Brazil, India, China, Russia and South Africa (the latter being added somewhat later.) With the greater global footprint the policy choices of these countries matter more.

This report draws upon the growing Global Trade Alert database of crisis-era policy choices to critically assess the trade strategies of the BRICS nations in advance of their annual summit in Russia in July 2015. The Report provides an up-to-date account of the harm done to these countries’ commercial interests as well as the resort to protectionism and market reforms undertaken by the BRICS. It includes a clear recommendation, namely, that the BRICS ought to be included in the vanguard of measures at the global level to discourage, monitor, and unwind protectionism.

The Global Trade Alert is an important part of the portfolio of trade policy-related initiatives undertaken by CEPR researchers in recent years. Other initiatives have included dissecting WTO negotiations and the impasse over the Doha round of multilateral trade negotiations; understanding the factors responsible for the collapse of world trade in 2009; and analyses of proposals to create so-called mega-regional trade agreements. These initiatives have produced a large amount of well-regarded analysis that can be found on www.cepr.org and on www.VoxEU.org.

Sustained data collection initiatives such as the Global Trade Alert do not happen without the commitment of a dedicated team. In this case, the team is led by Simon J. Evenett, Co-Director of the CEPR’s International Trade and Regional Economics Programme. Day-to-day management of the Global Trade Alert is ably performed by Dr. Johannes Fritz. In addition, the following team members contributed considerably to the major data collection effort undertaken during the past seven months: Ajsun Aly, Nithya Anand, Morgan Boëffard, Steven Chiu, Michael Füglister, Craig VanGrasstek, Chintan Jadwani, Piotr Lukaszuk, Iva Mihaylova, and Adelina Selimi. Anil Shamdasani smoothly managed the preparation of this manuscript for publication. On behalf of CEPR, I am very grateful to them all.

Dr. Tessa OgdenDeputy Director, CEPR2 July 2015

http://www.cepr.org

http://www.voxeu.org

1

What approach to trade policy should the BRICS leaders take at their forthcoming summit in Ufa, Russia?1 In 2014, those leaders and their trade ministers focused on fostering commercial ties, establishing a New Development Bank, advocating steps at the World Trade Organization (WTO) and cautioning that mega-regional free trade deals, such as the Trans-Pacific Partnership, should not harm non-members.2

At a time when each of the BRICS’ exports are falling and when only India is expected to see faster economic growth in 2015 and 2016, this report argues that the trade strategy of the BRICS should be rethought. Greater attention should be placed on the unilateral actions taken by governments that limit imports and that artificially inflate exports. The report will show that, on average, every day since the Global Crisis began the commercial interests of at least one BRICS nation have been harmed by the imposition of a foreign trade distortion. The BRICS ought to have a strong interest in discouraging and unwinding protectionism.

Moreover, BRICS trade ministers may want to rethink the wisdom of their excusing protectionism imposed by developing countries on the grounds that their economies are deserving of ‘special and differential treatment’. This report will show that ‘only’ a fifth of the trade distortions harming the BRICS were implemented by the leading industrialised countries. There isn’t much evidence of BRICS solidarity either, as one third of the hits to BRICS commercial interests come from another BRICS member. There is an opportunity here for the BRICS members to show global leadership on protectionism by exercising restraint both individually and collectively.

1 For the purposes of this report, the BRICS group of nations is taken to include Brazil, China, India, Russia, and South Africa. It is well known that when the term BRIC was introduced it referred to the first four of these five nations. The inclusion of South Africa here reflects its attendance at the BRICS summits.

2 The 2014 BRICS leaders’ declaration can be found at http://brics6.itamaraty.gov.br/category-english/21-documents/223-sixth-summit-declaration-and-action-plan. The communique of the BRICS trade ministers meeting, which took place just before their leaders met in Brazil in 2014, can be found at http://brics6.itamaraty.gov.br/category-english/21-documents/225-communique-of-the-meeting-of-trade-ministers-on-the-eve-of-the-vi-summit.

1 Executive Summary

http://brics6.itamaraty.gov.br/category-english/21-documents/223-sixth-summit-declaration-and-action-plan


http://brics6.itamaraty.gov.br/category-english/21-documents/225-communique-of-the-meeting-of-trade-ministers-on-the-eve-of-the-vi-summit

http://brics6.itamaraty.gov.br/category-english/21-documents/225-communique-of-the-meeting-of-trade-ministers-on-the-eve-of-the-vi-summit

2 The BRICS Trade Strategy: Time for a Rethink

BRICS exports have stalled

At the end of May 2015, the OECD published data on the first quarter exports and imports of leading trading nations, including the BRICS (OECD 2015). These data showed that, in US dollar terms, the total value of each BRICS nation’s exports was falling (see Figure 1.1). Worse, the exports of Brazil, India, Russia, and South Africa have essentially stagnated over the past four years or have deteriorated significantly. China’s exports appear to have plateaued at the end of 2014.

Such data should worry BRICS policymakers, as exports have been a useful driver of economic growth in many emerging markets. It certainly prevents one argument from being made that is frequently used to dismiss concerns about protectionism, namely, exports are growing so what’s the problem? If BRICS trade ministers aren’t concerned now about their nations’ export performance, then what fall in exports would get their attention?

Figure 1.1 Only China’s exports are now worth more in US dollar terms than four years ago – and even there Q1 2015 data is disturbing

70

80

90

100

110

120

130

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

Brazil China India Russia South Africa

Source: OECD (2015). For each series the data was normalised to 100 in Q2 2011.

Executive Summary 3

Fighting the wrong enemy?

Using data collected by the independent Global Trade Alert (GTA),3 whose database now contains 134% more entries for government policies taken since the crisis began4 than the WTO’s Trade Monitoring Database, the number of times the commercial interests of each of the BRICS have been harmed by trading partners can be calculated. The summary statistics for the BRICS are shown in Figure 1.2. Taken together, 2,733 measures taken by trading partners have harmed one or more members of the BRICS. In fact, since the Crisis began, 60% of the protectionist measures implemented worldwide have harmedat least one member of the BRICS.

No country in the world has seen their commercial interests hit as often as China, whose interests have been harmed a total of 2,153 times. South Africa, the least hit of the BRICS, has seen its commercial interests hit 649 times. Any notion that the BRICS have been able to escape beggar-thy-neighbour policies since the Crisis began should be set aside.

Figure 1.2 The BRICS’ commercial interests have been hit over 2,700 times since the Crisis began

0

500

1000

1500

2000

2500


Harmful measures still in effect Harmful measures no longer in effect

3 The Global Trade Alert database is best thought as capturing the change in policy stance towards foreign commercial interests since the Global Crisis began. In terms familiar to economists, it is therefore interested in the ‘flow’ of new government measures. This approach does not deny the potential importance of the ‘stock’ of commercial policies existing before the Crisis began. For the record, it should also be noted that the Global Trade Alert database contains data on measures that improve the relative treatment of foreign commercial interests vis-à-vis domestic interests as well as measures that harm the former at the expense of the latter. Information on each of the 6,849 measures currently in the Global Trade Alert database, plus a range of summary statistics, can be found at www.globaltradealert.org.

4 For the Global Trade Alert database, this period is taken as starting with the first Crisis-era summit of G20 leaders in November 2008.


Which trading partners are responsible for the significant number of hits to their commercial interests? This matter takes on particular significance for the BRICS. Not only are these countries signatories to the various G20 pledges to eschew protectionism, but, in their condemnation of protectionism, BRICS trade ministers often excuse measures taken by developing countries on the grounds that they amount to ‘special and differential treatment’. It may come as a surprise, therefore, to find that just 20% of the 2,733 measures harming the BRICS were implemented by the industrialised members of the G20. This, of course, does not imply that such industrial-country protectionism is inconsequential or irrelevant. Rather it suggests that, while it may be diplomatically convenient to frame Crisis-era beggar-thy-neighbour activity in North versus South terms, the reality is quite different.

Figure 1.3 Special and differential treatment for developing countries – at the expense of the BRICS

Distribution of responsibility for Crisis-era hits to BRICS commercial interests

G7 plus Australia 20%

BRICS 32%

Rest of G20 21%

Rest of World

27%

The reality is that the developing country members of the G20 are responsible for more than half of the hits to the commercial interests of the BRICS. Furthermore, notions of BRICS solidarity on protectionism should be set aside – almost a third of the times a BRICS commercial interest is harmed, it is due to actions taken by another member of the club.

Table 1.1 shows that each of the BRICS nations has been harmed at least 199 times by the other four BRICS – with Russia the least hit and, once again, China being hit the most often. A straightforward way for the BRICS to show greater solidarity would be to initiate a programme to unwind the 1,196 measures that they have taken that harm each other’s commercial interests.

Executive Summary 5

Tabl

e 1.

1 A

s fa

r as

beg

gari

ng-t

hy-n

eigh

bour

is c

once

rned

, the

re is

not

muc

h ev

iden

ce o

f sol

idar

ity a

mon

g th

e B

RIC

S

Num

ber

of h

arm

ful m

easu

res

impo

sed

sinc

e cr

isis

beg

anIm

plem

entin

g B

RIC

S

Tota

l num

ber

of ti

mes

ha

rmed

by

fello

w B

RIC

SN

umbe

r of

har

mfu

l mea

sure

s st

ill in

forc

eB

razi

lC

hina

Indi

aR

ussi

a So

uth

Afr

ica

Har

med

BR

ICS

Bra

zil

51

107

7926

263

33

7250

2317

8

Chi

na15

4

284

202

6770

7

122

23

414

45

505

Indi

a81

72

8135

269

6450

57

3420

5

Rus

sia

2766

100

6

199

1748

64

413

3

Sout

h A

fric

a43

4511

140

23

9

3335

7829

17

5


Time to clean up their own act as well

To be fair, since the Crisis began the record of BRICS commercial policy has been mixed, as shown in Figure 1.4. For sure, the BRICS’ share of the global total of discriminatory measures has risen year by year from 20% in 2008 to just under 40% in 2014 and 2015.

However, it must be acknowledged that the BRICS’ share of the global total of liberalising measures has risen to one half in 2014 and 2015. Moreover, for much of the reporting period, half of the BRICS measures introduced each year liberalised trade or foreign investment. While the latter are to be applauded, such findings are tempered by the fact that 28% of BRICS trade reforms were temporary and have already lapsed (the comparable percentage for the rest of the world is much lower at 15%).

Figure 1.4 The mixed commercial policy record of the BRICS 70%

Annualised 2008

2009 2010 2011 2012 2013 2014 Year to date 2015

BRICS share of global discrimination BRICS share of global liberalisation Ratio of BRICS liberalisation to discrimination

60%

50%

40%

30%

20%

10%

0%

When the spotlight is pointed on the steps taken by BRICS governments to tilt the playing field against foreign commercial interests, the extent of their retreat from open borders becomes clear. Figure 1.5 presents the totals for the number of measures each of the BRICS have taken that discriminate against foreign commercial interests. India and Russia have taken almost 450 harmful measures since the Crisis began. Only a fifth of the BRICS’ harmful measures have been unwound.

Executive Summary 7

Figure 1.5 Together, the BRICS have implemented 1,450 trade disortions since the Crisis began, and only 20% have been unwound

0

50

100

150

200

250

300

350

400

450

500


Trade distortions still in force Unwound trade distortions

That BRICS protectionism has inflicted harm on trading partners worldwide is shown in Maps 1.1 and 1.2 In the first map, conservative estimates of the total number of times each nation’s commercial interests have been hit by discriminatory measures taken by the BRICS group are reported. It is striking how many trading partners of the BRICS have seen their commercial interests hit over 150 times.

As the discussion in Chapter 4 makes clear, since the Global Crisis began three of the BRICS (Brazil, India, and China) have introduced additional incentives to inflate exports. These incentives harm the interests of trading partners that compete in the same markets abroad, boosting the market shares of goods shipped by these three BRICS. Using detailed product and bilateral trade data, as shown in Map 1.2, for many of the BRICS’ trading partners the percentage of exports harmed by BRICS export incentives is significant.

Taken together, these findings imply that there is much the BRICS could do to improve their commercial policy credentials. As the charts at the end of this chapter and the discussion in Chapter 3 make clear, while the mix of trade distortions introduced by each of the BRICS differs, the reality is that the BRICS have repeatedly discriminated against foreign commercial interests, harming not only industrial countries and each other, but also more vulnerable developing countries. That harm is done not only by import restrictions but also by the many steps taken by the BRICS to artificially lift their exports.5

5 Given how poorly Brazil’s and India’s exports have performed during the past four years, the question arises of how much lower the contribution of exports to economic growth would have been in these two countries in the absence of these artificial export incentives?


Map

1.1

M

ore

than

the

occa

sion

al h

it: T

he g

loba

l rea

ch o

f BR

ICS

trad

e di

stor

tions

Executive Summary 9

Map

1.2

A

rtifi

cial

exp

ort i

ncen

tives

by

the

BR

ICS

thre

aten

larg

e sh

ares

of t

heir

trad

ing

part

ner’s

exp

orts


Global context: The three phases of Crisis-era protectionism

The evolution in the BRICS’ commercial policy stance should also be seen in the relevant global context. The latest update of the Global Trade Alert, which involved adding over 1,050 reports of government measures to the database over the past seven months, reinforced previous findings that there have been three phases of Crisis-era discrimination against foreign commercial interests (see Figure 1.6).

Figure 1.6 The increase in the resort to trade distortions since 2012 is worse than previously thought

0

50

100

150

200

250

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Num

ber o

f dis

crim

inat

ory

polic

ies

impl

emen

ted

each

qua

rter,

by

GTA

repo

rt

GTA 17 (June 2015) GTA 16 (November 2014) GTA 14 (September 2013) GTA 11 (June 2012)

The first phase involved a spike in protectionism in the first quarter of 2009 followed by declines in the quarterly totals of new harmful measures imposed through to Q3 2010. Then the rate of new protectionist measures imposed every quarter plateaus at around 160 per quarter until the end of Q4 2011.

From 2012 on, coinciding with a slowdown of world trade growth, the number of protectionist measures implemented each quarter has risen again. Given reporting lags, the quarterly totals for 2014 are likely to be revised upwards (as the results in this figure show when comparing this report with previous GTA reports). Those upward revisions would not have to be that significant to exceed 160 per quarter, suggesting that the third phase of Crisis-era protectionism may not be over.

All in all, there is little comfort for BRICS policymakers in these reported totals for the worldwide resort to discrimination against foreign commercial interests. Access to foreign markets remains at considerable risk.

Executive Summary 11

The BRICS trade strategy: Time for a rethink

The exposure of BRICS commercial interests to discrimination by foreign governments revealed in this report calls for a rethink of the BRICS trade strategy. At best, the current BRICS strategy is incoherent. On the one hand, the BRICS have sought to bolster trade between themselves with more generous credit lines for exporters and the like. On the other hand, the BRICS are responsible for a third of the instances of the harm to each other’s commercial interests. This cannot make sense.

The BRICS approach of turning a blind eye to protectionism undertaken by developing countries under the guise of ‘special and differential treatment’ is difficult to square with the propensity of the latter to take actions that harm the former’s commercial interests. How many jobs in exporting industries have been lost as a result?

While any harm done by industrialised countries to the commercial interests of the BRICS should rightly be condemned, a less selective approach to tackling Crisis-era protectionism would seem to be in order. The frequency with which BRICS commercial interests are harmed by beggar-thy-neighbour interests ought to make the BRICS champions of the monitoring of protectionism by international organisations and of renewing the G20 pledge on eschewing protectionism. With their exports stalling or falling, the BRICS ought to welcome any steps to roll back protectionism.

Organisation of this report

The remainder of this report is organised as follows. Following this chapter, the trade policy stance of the BRICS – both in terms of discrimination and liberalising policy – is summarised in a series of spiral diagrams and maps. These diagrams have been deliberately designed to facilitate comparison across the BRICS and across the trading partners of each BRICS member.

Part Two of the report contains three chapters. A summary of government interventions worldwide, both liberalising and discrimnatory, is presented in Chapter 2. Chapter 3 discusses the commercial policy stance of the BRICS in more detail. The exposure of the Least Developed Countries to artificial Crisis-era export incentives imposed by the BRICS is discussed in Section 4.

Further summary statistics on the change in policies implemented by the BRICS that affect the relative treatment of foreign commercial interests are presented in Part Three of this report. Corresponding statistics of the frequency of harm done to and of benefits to the commercial interests of the BRICS by their trading partners are also reported here.


Reference

OECD (2015), “International trade slows sharply in first quarter of 2015”, 28 May (available at http://www.oecd.org/std/its/OECD-Trade-Q12015.pdf).

http://www.oecd.org/std/its/OECD-Trade-Q12015.pdf

PART ONE

Benchmarking the BRICS’ resort to protectionism and trade liberalisation

Benchmarking the BRICS’ resort to protectionism and trade liberalisation 15B

RIC

S versus G7

0

.2

.4

.6

.8

1

Share of all measures sinceNovember 2008 that are harmful

Share of harmfulmeasures that are

’murky’ (not tariffs andtrade defence)

Share of tariff linesaffected by remaining

harmful measures

Share of tariff lines affected byall implemented harmful measures

Share of harmfulmeasures still to be

unwound

Share of all measuressince 1 January 2012

that are harmful in

crea

sing

lypr

otec

tioni

st

0

.2

.4

.6

.8

1

BRICS average, current summitG−7 average, current summit

Source: The Global Trade Alert, June 2015.Statistics presented here based on measuresimplemented by the stated jurisdictions.

Notes: Associated with each of the six criteria employed here is a score that lies between zero and one, with higher scores reflecting larger deviations from open borders

BRICS versus G7: Resort to discrimination

16 The BRICS Trade Strategy: Time for a RethinkB

RIC

S ve

rsus

G7

0

.2

.4

.6

.8

1

Share of all measures sinceNovember 2008 that are liberalising

Share of liberalisingmeasures that are

tariff cuts

Share of tariff linesbenefiting from remaining

liberalising measures

Share of tariff lines benefiting fromall implemented liberalising measures

Share of liberalisingmeasures that were

temporary


that are liberalisingin

crea

sing

lylib

eral

isin

g

0

.2

.4

.6

.8

1




BRICS versus G7: Resort to liberalisation

Benchmarking the BRICS’ resort to protectionism and trade liberalisation 17B

RA

ZIL

0

.2

.4

.6

.8

1





harmful measures



unwound


that are harmful in

crea

sing

lypr

otec

tioni

st

0

.2

.4

.6

.8

1

Brazil, current summitBrazil, before 1 January 2012BRICS average, current summit



Brazil: Resort to discrimination


RA

ZIL

0

.2

.4

.6

.8

1



tariff cuts





temporary



crea

sing

lylib

eral

isin

g

0

.2

.4

.6

.8

1

Brazil, current summitBrazil, before 1 January 2012BRICS average, current summit



Brazil: Resort to liberalisation

Benchmarking the BRICS’ resort to protectionism and trade liberalisation 19C

HIN

A

0

.2

.4

.6

.8

1





harmful measures



unwound


that are harmful in

crea

sing

lypr

otec

tioni

st

0

.2

.4

.6

.8

1

China, current summitChina, before 1 January 2012BRICS average, current summit



China: Resort to discrimination

20 The BRICS Trade Strategy: Time for a RethinkC

HIN

A

0

.2

.4

.6

.8

1



tariff cuts





temporary



crea

sing

lylib

eral

isin

g

0

.2

.4

.6

.8

1

China, current summitChina, before 1 January 2012BRICS average, current summit



China: Resort to liberalisation

Benchmarking the BRICS’ resort to protectionism and trade liberalisation 21IN

DIA

0

.2

.4

.6

.8

1





harmful measures



unwound


that are harmful in

crea

sing

lypr

otec

tioni

st

0

.2

.4

.6

.8

1

India, current summitIndia, before 1 January 2012BRICS average, current summit



India: Resort to discrimination

22 The BRICS Trade Strategy: Time for a RethinkIN

DIA

0

.2

.4

.6

.8

1



tariff cuts





temporary



crea

sing

lylib

eral

isin

g

0

.2

.4

.6

.8

1

India, current summitIndia, before 1 January 2012BRICS average, current summit



India: Resort to liberalisation

Benchmarking the BRICS’ resort to protectionism and trade liberalisation 23R

USSIA

N FED

ERA

TION

0

.2

.4

.6

.8

1





harmful measures



unwound


that are harmful in

crea

sing

lypr

otec

tioni

st

0

.2

.4

.6

.8

1

Russian Federation, current summitRussian Federation, before 1 January 2012BRICS average, current summit



Russian Federation: Resort to discrimination

24 The BRICS Trade Strategy: Time for a RethinkR

USS

IAN

FED

ERA

TIO

N

0

.2

.4

.6

.8

1



tariff cuts





temporary



crea

sing

lylib

eral

isin

g

0

.2

.4

.6

.8

1

Russian Federation, current summitRussian Federation, before 1 January 2012BRICS average, current summit



Russian Federation: Resort to liberalisation

Benchmarking the BRICS’ resort to protectionism and trade liberalisation 25SO

UTH

AFR

ICA

0

.2

.4

.6

.8

1





harmful measures



unwound


that are harmful in

crea

sing

lypr

otec

tioni

st

0

.2

.4

.6

.8

1

South Africa, current summitSouth Africa, before 1 January 2012BRICS average, current summit



South Africa: Resort to discrimination

26 The BRICS Trade Strategy: Time for a RethinkSO

UTH

AFR

ICA

0

.2

.4

.6

.8

1



tariff cuts





temporary



crea

sing

lylib

eral

isin

g

0

.2

.4

.6

.8

1

South Africa, current summitSouth Africa, before 1 January 2012BRICS average, current summit



South Africa: Resort to liberalisation

Maps of the countries harmed by each BRICS nation

Maps of the countries harmed by each BRICS nation 35

Map

1

BR

ICS:

Wor

ldw

ide

inci

denc

e of

har

m d

one

by a

ll B

RIC

S m

embe

rs’ d

iscr

imin

ator

y m

easu

res

BR

ICS


Map

2

BR

ICS:

Sha

re o

f non

-com

mod

ity e

xpor

ts c

ompe

ting

with

a s

ubsi

dise

d riv

al fr

om a

t lea

st o

ne B

RIC

S co

untr

y in

201

5

BR

ICS

Maps of the countries harmed by each BRICS nation 37B

RA

ZIL

Map

3

Bra

zil:

Wor

ldw

ide

inci

denc

e of

har

m d

one

by th

is B

RIC

S co

untr

y’s

disc

rim

inat

ory

mea

sure

s


RA

ZIL

Map

4

Bra

zil:

Shar

e of

non

-com

mod

ity e

xpor

ts c

ompe

ting

with

a s

ubsi

dise

d riv

al fr

om th

is B

RIC

S co

untr

y in

201

5

Maps of the countries harmed by each BRICS nation 39C

HIN

AM

ap 5

C

hina

: Wor

ldw

ide

inci

denc

e of

har

m d

one

by th

is B

RIC

S co

untr

y’s

disc

rim

inat

ory

mea

sure

s


Map

6

Chi

na: S

hare

of n

on-c

omm

odity

exp

orts

com

petin

g w

ith a

sub

sidi

sed

rival

from

this

BR

ICS

coun

try

in 2

015

CH

INA

Maps of the countries harmed by each BRICS nation 41IN

DIA

Map

7

Indi

a: W

orld

wid

e in

cide

nce

of h

arm

don

e by

this

BR

ICS

coun

try’

s di

scri

min

ator

y m

easu

res


DIA

Map

8

Indi

a: S

hare

of n

on-c

omm

odity

exp

orts

com

petin

g w

ith a

sub

sidi

sed

rival

from

this

BR

ICS

coun

try

in 2

015

Maps of the countries harmed by each BRICS nation 43R

USSIA

N FED

ERA

TION

Map

9

Rus

sia:

Wor

ldw

ide

inci

denc

e of

har

m d

one

by th

is B

RIC

S co

untr

y’s

disc

rim

inat

ory

mea

sure

s


Map

10

R

ussi

a: S

hare

of n

on-c

omm

odity

exp

orts

com

petin

g w

ith a

sub

sidi

sed

rival

from

this

BR

ICS

coun

try

in 2

015

RU

SSIA

N F

EDER

ATI

ON

Maps of the countries harmed by each BRICS nation 45SO

UTH

AFR

ICA

Map

11

So

uth

Afr

ica:

Wor

ldw

ide

inci

denc

e of

har

m d

one

by th

is B

RIC

S co

untr

y’s

disc

rim

inat

ory

mea

sure

s


Map

12

So

uth

Afr

ica:

Sha

re o

f non

-com

mod

ity e

xpor

ts c

ompe

ting

with

a s

ubsi

dise

d riv

al fr

om th

is B

RIC

S co

untr

y in

201

5

SOU

TH A

FRIC

A

PART TWO

BRICS commercial policy choices and global developments

49

Although the focus of this report is on the BRICS, their policy choices may well have been conditioned by global developments in commercial policy. The purpose of this chapter is to summarise key developments at the global level that have become apparent since our last report was published in November 2014. Since then, 1,066 new entries have been added to the Global Trade Alert (GTA) database (Table 2.1), sustaining the expansion of the database achieved in recent years (of approximately 1,000 new measures being documented every six months.)

Principal changes to the global totals reported hitherto

There have been no major changes in the manner in which announced policy changes were identified, investigated, and evaluated by the Global Trade Alert team. Therefore, readers interested in the processes used by the Global Trade Alert are referred to the discussions in previous reports or, for the most recent account of these practices, to Chapter 3 of Evenett and Fritz (2015).

Compared to the last GTA report (the 16th report), the principal changes in the GTA database include the following:

• The addition of 1,066 reports on announced government policy changes, 882 of which refer to policy changes other than trade defence measures (Table 2.1).

• The documentation of 608 additional measures that discriminate against foreign commercial interests (Table 2.1).

• Of the 1,066 new reports in the database, 912 refer to government actions that have been implemented. Of the latter, 288 were measures that improved the relative treatment of foreign commercial interests vis-à-vis domestic rivals, the rest were discriminatory (Table 2.2).

• A total of 335 new measures implemented by the BRICS countries were documented, 215 of which discriminated against foreign commercial interests (Table 2.3).

• A total of 4,709 measures that were implemented worldwide remain in force, of which 3,554 discriminate against foreign commercial interests. The ratio of the number of discriminatory to liberalising measures still in force exceeds 3 to 1 (Table 2.4).

2 The Global Landscape of Protectionism


• The expansion of the GTA database has resulted in many of the large trading nations having 200 or more hits to their commercial interests since the onset of the global economic crisis. The top 10 most affected jurisdictions listed in Table 2.5 have all been hit over 1,000 times.

• With the expansion of the database, China has moved into the top ten jurisdictions that have resorted to protectionism most often (at 8th position.) The United States has moved up to 4th position (second column of Table 2.6).

• Likewise, export subsidies have moved into the list of top ten most frequently used forms of discrimination against foreign commercial interests (at 8th position). Since November 2008, 58 jurisdictions have resorted to such measures (see Table 2.7).

• Over 100 more instances where trade defence measures or import safeguard duties were imposed upon foreign firms have been recorded since the last report was published (Table 2.8).

• The update undertaken for this report has resulted in sizeable increases in the number of discriminatory measures found in Q1 2009, Q1 2010, Q2 2013, and throughout 2014 (Figure 2.1).

Key features of the global landscape of protectionism

In terms of variation in the resort to protectionism over time, as noted in the Executive Summary, there have been three phases during the crisis era (see Figures 1.6 and 2.1). A surge in protectionism in Q1 2009 was witnessed when 250 harmful measures were introduced, followed by falling quarterly totals in the resort to new protectionism through to Q3 2010. Then, as the global economy stabilised and began to recover, the number of new protectionist measures imposed stabilised at around 160 measures per quarter.

This second phase ended at the beginning of 2012, when global economic growth began to stall and the number of new protectionist measures implemented began to rise, exceeding 200 new measures per quarter in the first half of 2013. The total number of new protectionist measures being found since then has been revised upwards repeatedly. Only in the most recent quarters, which are subject to greater reporting lags, are the quarterly totals below 160, the plateau associated with the second phase. Should the relationship between global economic growth rates and the quarterly resort to protectionism continue in the fashion seen to date, then one should expect considerable upward revisions in the totals for 2014 and 2015.

The data provided in Table 2.1 and in Figure 2.1 reveal the degree to which crisis-era policy changes, whether liberalising or discriminatory, were temporary or remain in force. Between 30-50% of the protectionism imposed during the four quarters of 2009 has now lapsed. Since November 2008, 26% of the liberalising measures have now lapsed. In contrast, only 21% of all discriminatory measures

The Global Landscape of Protectionism 51

no longer remain in force. Unwinding reforms occurs faster than removing protectionism.

In terms of variation in the use of policies to discriminate against foreign commercial interests, Figure 2.2 demonstrates that trade defence measures were the most popular tool, followed by bailouts and state aid measures.1 Tariff increases were the third most popular tool, in terms of counts of the numbers of measures. However, such counts may not afford an accurate sense of the geographic reach and commercial impact of different forms of protectionism.

In terms of trading partners affected, as shown in Table 2.7, implemented trade defence measures affected the commerce of 150 jurisdictions. In contrast, trade-distorting bailouts of domestic firms, trade finance measures, and other export subsidies and incentives have harmed commercial interests in 215 or more jurisdictions. Certain border barriers – specifically, tariff increases and export taxes and restrictions – and a wave of local content requirements have adversely affected the commerce of over 200 jurisdictions.

In terms of the amount of trade affected, global totals were not calculated for this report. However, in Evenett and Fritz (2015) and in two memoranda recently prepared on the basis of GTA data, a clear pattern has begun to emerge. The amount of trade affected by trade defence measures is frequently less than 1% and in all calculations to date, less than 2% of possibly affected exports. Tariff increases, local content requirements, and public procurement measures affect more trade than trade defence, although by how much has varied.

Imports of products into nations where a local firm has been bailed out tends to be the second largest category of trade affected. Finally, by a wide margin, exports to third markets that compete against a subsidised foreign rival account in the computations performed to date for the largest amount of trade affected.2 This latter result is consistent with a finding mentioned in earlier Global Trade Alert reports, namely, that the current era has been associated with a shift in discrimination towards policy instruments that are less transparent than tariffs and subject to less strict multilateral trade disciplines.

Reference

Evenett, S. J. and J. and Fritz (2015), Throwing Sand In The Wheels: How Foreign Trade Distortions Slowed LDC Export-Led Growth, London: CEPR Press.

1 Only 18% of these bailouts refer to the financial sector.

2 For the scale of the exports of Least Developed Countries that compete in third markets with foreign

rivals that benefit from state-provided export incentives see Table 4.1 and Figure 4.1 in the next chapter.


Tabl

e 2.

1 To

tal n

umbe

r of

sta

te m

easu

res

repo

rted

in th

e G

TA d

atab

ase

Stat

istic

This

rep

ort

(June

201

5)In

crea

se fr

om p

revi

ous

repo

rt (N

ovem

ber

2014

)

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

l num

ber

of m

easu

res

in G

TA

data

base

6849

5243

1066

882

Tota

l num

ber

of m

easu

res

code

d gr

een

1642

1633

296

296

of w

hich

cur

rent

ly in

forc

e11

5511

4619

719

7 o

f whi

ch a

re p

endi

ng74

7414

114

1 o

f whi

ch n

o lo

nger

in fo

rce

413

413

9292

Tota

l num

ber

of m

easu

res

code

d am

ber

1185

754

239

135

of w

hich

cur

rent

ly in

forc

e39

839

179

79 o

f whi

ch a

re p

endi

ng69

026

812

2948

8 o

f whi

ch n

o lo

nger

in fo

rce

9795

1918

Tota

l num

ber

of m

easu

res

code

d re

d 40

2028

5552

945

0 o

f whi

ch c

urre

ntly

in fo

rce

3156

2180

426

356

pen

ding

impl

emen

tatio

n3

33

3 o

f whi

ch n

o lo

nger

in fo

rce

861

672

100

91


Tabl

e 2.

2 M

easu

res

impl

emen

ted

sinc

e th

e fir

st c

risi

s re

late

d G

20 s

umm

it in

Nov

embe

r 20

08, t

otal

s fo

r al

l Jur

isdi

ctio

ns a

nd c

hang

e si

nce

the

repo

rt in

Nov

embe

r 20

14

Stat

istic

This

rep

ort

(June

201

5)In

crea

se fr

om p

revi

ous

repo

rt (N

ovem

ber

2014

)

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

l num

ber

of m

easu

res

in G

TA d

atab

ase

6078

4895

912

832

Tota

l num

ber

of m

easu

res

code

d gr

een

1567

1558

288

288

Tota

l num

ber

of m

easu

res

code

d am

ber

494

485

9897

Tota

l num

ber

of m

easu

res

code

d re

d40

1728

5252

644

7To

tal n

umbe

r of

4-d

igit

tari

ff lin

es a

ffect

ed b

y al

mos

t cer

tain

ly d

iscr

imin

ator

y m

easu

res

1220

1220

34

Tota

l num

ber

of 2

-dig

it se

ctor

s af

fect

ed b

y al

mos

t cer

tain

ly d

iscr

imin

ator

y m

easu

res

6969

00

Tota

l num

ber

of ju

risd

ictio

ns a

ffect

ed b

y al

mos

t cer

tain

ly d

iscr

imin

ator

y m

easu

res

226

226

44


Tabl

e 2.

3 M

easu

res

impl

emen

ted

by B

RIC

S co

untr

ies

sinc

e th

e fir

st c

risi

s re

late

d G

20 s

umm

it in

Nov

embe

r 20

08, t

otal

s fo

r al

l BR

ICS

coun

trie

s an

d ch

ange

sin

ce th

e re

port

in N

ovem

ber

2014

Stat

istic

This

rep

ort

(June

201

5)In

crea

se fr

om p

revi

ous

repo

rt (N

ovem

ber

2014

)

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

l num

ber

of m

easu

res

in G

TA d

atab

ase

2167

1796

335

325

Tota

l num

ber

of m

easu

res

code

d gr

een

717

711

120

120

Tota

l num

ber

of m

easu

res

code

d am

ber

163

159

2929

Tota

l num

ber

of m

easu

res

code

d re

d12

8792

618

617

6To

tal N

umbe

r of

4-d

igit

tari

ff lin

es a

ffect

ed b

y al

mos

t cer

tain

ly d

iscr

imin

ator

y m

easu

res

1202

1202

1921

Tota

l Num

ber

of 2

-dig

it se

ctor

s af

fect

ed b

y al

mos

t cer

tain

ly d

iscr

imin

ator

y m

easu

res

6565

22

Tota

l num

ber

of ju

risd

ictio

ns a

ffect

ed b

y al

mos

t cer

tain

ly d

iscr

imin

ator

y m

easu

res

218

217

55

Tabl

e 2.

4 M

easu

res

impl

emen

ted

sinc

e th

e fir

st c

risi

s-re

late

d G

20 s

umm

it in

Nov

embe

r 20

08 th

at a

re s

till i

n fo

rce

Wor

ldB

RIC

S on

ly

Stat

istic

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

lTo

tal e

xcep

t tra

de

defe

nce

and

safe

guar

d m

easu

res

Tota

l num

ber

of m

easu

res

in G

TA d

atab

ase

4709

3717

1691

1388

Tota

l num

ber

of m

easu

res

code

d gr

een

1155

1146

531

525

Tota

l num

ber

of m

easu

res

code

d am

ber

398

391

134

131

Tota

l num

ber

of m

easu

res

code

d re

d31

5621

8010

2673

2


Tabl

e 2.

5 To

p 10

big

gest

targ

ets

of p

rote

ctio

nist

mea

sure

s ta

ken

sinc

e N

ovem

ber

2008

Num

ber

of d

iscr

imin

ator

y m

easu

res

impo

sed

on

targ

et s

ince

Nov

embe

r 20

08

Num

ber

of d

iscr

imin

ator

y

mea

sure

s on

targ

et a

nd s

till

in fo

rce

Num

ber

of tr

adin

g pa

rtne

rs

impo

sing

dis

crim

inat

ory

mea

sure

s

Num

ber

of p

endi

ng m

easu

res,

w

hich

if im

plem

ente

d w

ould

ha

rm ta

rget

too

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)1

Chi

na21

5331

117

4524

610

13

312

32

EU-2

819

9533

015

0625

011

54

590

43

Uni

ted

Stat

es o

f Am

eric

a15

8225

611

8617

910

15

142

34

Ger

man

y14

0625

410

7019

591

314

22

5Fr

ance

1245

233

937

173

853

124

26

Uni

ted

Kin

gdom

1229

229

924

168

979

124

27

Italy

1225

225

903

160

803

124

48

Rep

ublic

of K

orea

1196

229

923

166

884

140

49

Japa

n11

5323

788

117

193

411

64

10Sp

ain

1070

199

790

143

784

101

3


Table 2.6 Which countries have inflicted harm since November 2008?

Rank

Ranked by number of

discriminatory measures imposed

Ranked by the number of tariff lines (product

categories) affected by

discriminatory measures1

Ranked by the number of

sectors affected by discriminatory

measures2

Ranked by the number of

trading partners affected by

discriminatory measures3

1 EU-28 (604) EU-28 (1220) EU-28 (69) EU-28 (226)

2 India (452) India (1174) Italy (69) Italy (212)

3Russian Federation

(446)Belgium (1099) Argentina (69) India (212)

4United States of America (344)

Poland (1094)Russian Federation

(63)Brazil (210)

5 Argentina (322) France (1078) Germany (62) Germany (207)

6 Brazil (250) Germany (1073) China (61)United Kingdom

(207)

7 Belarus (211) Italy (1073)United States of

America (59)France (205)

8 China (204) Greece (1072) Brazil (58) Poland (205)

9 Germany (203) Finland (1072) Algeria (58) Finland (204)

10 Indonesia (192) Netherlands (1070) Indonesia (57) Netherlands (204)

Notes: 1) The maximum number of tariff lines in the 4-digit UN classification used here is 1,229. 2) The maximum number of 2-digit sectors in the UN classification used is 69. 3) The maximum number of trading partners affected is 233.


Tabl

e 2.

7 Te

n m

ost u

sed

stat

e m

easu

res

to d

iscr

imin

ate

agai

nst f

orei

gn c

omm

erci

al in

tere

st s

ince

the

first

G20

cri

sis

mee

ting

(ran

ked

by

num

ber

of d

iscr

imin

ator

y m

easu

res

impo

sed)

Num

ber

of d

iscr

imin

ator

y

mea

sure

s im

pose

d si

nce

Nov

embe

r 20

08

Num

ber

of d

iscr

imin

ator

y

mea

sure

s im

pose

d an

d st

ill

in fo

rce

Num

ber

of ju

risd

ictio

ns

that

impo

sed

thes

e di

scri

min

ator

y m

easu

res

sinc

e N

ovem

ber

2008

Num

ber

of ju

risd

ictio

ns

harm

ed b

y th

ese

disc

rim

inat

ory

mea

sure

s si

nce

Nov

embe

r 20

08

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)

This

rep

ort

(June

201

5)

Incr

ease

from

pr

evio

us

repo

rt

(Nov

. 201

4)Tr

ade

defe

nce/

safe

guar

d11

7480

983

7071

115

030

Bai

l out

/ st

ate

aid

mea

sure

1019

198

733

177

705

217

9 T

ariff

mea

sure

706

9958

386

965

215

1 L

ocal

con

tent

req

uire

men

t34

277

323

7144

420

35

Exp

ort t

axes

or

rest

rict

ion

281

5615

726

495

206

5 T

rade

fina

nce

250

2620

817

321

213

15 In

vest

men

t mea

sure

239

3221

927

664

179

21 E

xpor

t sub

sidy

197

6314

145

587

217

2 N

on-t

ariff

bar

rier

(not

oth

erw

ise

spec

ified

)19

036

145

2778

120

30

Pub

lic p

rocu

rem

ent

168

2415

522

311

183

1

Tabl

e 2.

8 R

esor

t to

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0 50

100

150

200

250

300

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

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Figure 2.2 Top 10 implemented measures used to discriminate against foreign commercial interests since the first G20 crisis meeting

Trade defence measure (AD, CVD,

SG), 1174

Bail out / state aid measure, 1019

Tariff measure, 706

Local content requirement, 342

Export taxes or restriction, 281

Trade finance, 250

Investment measure, 239

Export subsidy, 197

Non tariff barrier (not otherwise specified), 190

Public procurement, 168

Migration measure, 163

Other, 549

Figure 2.3 Classification of pending measures that, if implemented, would almost certainly discriminate against foreign commercial interests

Trade defence measure (AD, CVD,

SG), 423

Bail out / state aid measure, 52

Local content requirement, 51

Tariff measure, 42

Public procurement, 41

Investment measure, 32

Other service sector measure, 27

Export taxes or restriction, 23

Non tariff barrier (not otherwise specified), 21

Export subsidy, 20

Other, 108

61

The purpose of this chapter is to characterise the commercial policy response of the BRICS to the global economic crisis and to describe the trade distortions faced by the trading interests of these rising economic powers. The former is of interest as it may reveal the extent to which the BRICS have resorted to beggar-thy-neighbour policies, thereby shifting the burden of crisis-era adjustment on to others. The latter reveals much about the ‘offensive’ interests of the BRICS, which may embolden export and outward-oriented business interests in these countries to seek government favours and, even better, to counter the demands for protectionism at home.

The approach taken here is comprehensive in three respects. First, measures taken by the BRICS that improve the transparency of national policies and that liberalise those policies are considered as well as measures that tilt the playing field against foreign commercial interests.

Second, comparisons are made between the performance of the BRICS on key metrics and the Group of Seven (G7) leading industrialised nations and the other members of the Group of Twenty (G20) nations. Third, in line with the approach taken by the Global Trade Alert (GTA) and reflecting the various types of cross-border commerce in the twenty-first century, attention is not confined to policy changes affecting the international trade in goods.

Table 3.1 Only India is expected to maintain its rate of economic growth this year and next

GDP growth rate, %

Actual Latest IMF forecast2013 2014 2015 2016

Brazil 2.7 0.1 -1.0 1.0

China 7.8 7.4 6.8 6.3

India 6.9 7.2 7.5 7.5

Russia 1.3 0.6 -3.8 -1.1

South Africa 2.2 1.5 2.0 2.1

Source: IMF (2015).

3 The commercial policy stance of the BRICS


Slowing macroeconomic growth; stalled exports

It is important to appreciate the macroeconomic policy context in which national decisions to discriminate against foreign commercial interests are taken. If national incomes and exports are growing at a healthy clip, often it is argued that pressures to tilt the playing field in favour of domestic firms and workers are attenuated. With the exception of India, however, recent years have witnessed falling rates of economic growth, which the IMF expects to continue into 2015 and 2016 (see Table 3.1).

In addition, exports have made a falling contribution to economic growth in the BRICS. For sure, the total value of many of the BRICS’ exports in their own currencies has risen over the past four years. However, when converted into US dollars and, therefore, when seen in terms of its buying power on international markets,1 as Figure 3.1 makes clear, China is the only BRICS member whose exports have not stagnated over the past four years. Worse, the export data for Q1 2015 points to a deterioration in Chinese, Indian, Russian and South African sales to foreign markets. Over-reacting to a single quarter’s data makes little sense – still, the inability of many BRICS members to regain the export growth momentum seen before the crisis struck is a source of concern.

Figure 3.1 Only China’s exports are now worth more in US dollar terms than four years ago – and even there, Q1 2015 data is disturbing

70

80

90

100

110

120

130

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

Brazil China India Russia South Africa Source: OECD (2015).

1 As a wag once said, countries have to export because their suppliers of imports have the temerity to demand payment.

The commercial policy stance of the BRICS 63

The governments of BRICS members took aggressive steps as the global economic crisis struck. As in leading industrialised countries, fiscal stimulus packages were implemented. However, as shown in Figure 2, with the possible exception of Russia, the BRICS expanded final government consumption spending (which includes spending on salaries) faster than in the United States, which had its own significant expansion of state spending in the early years of the crisis.

Figure 3.2 Fiscal stimuli were a common crisis-era policy response in the BRICS

100

120

140

160

180

200

220

2005 2006 2007 2008 2009 2010 2011 2012 2013

Brazil China India Russia South Africa United States

Source: World Development Indicators.

Crisis-era policy response was not confined to fiscal stimulii. Each of the BRICS has undertaken extensive industrial policy intervention.2 BRICS industrial policies are wide-ranging in sectoral coverage and the policy instruments deployed. The selective nature of many of those policies has been shown to harm non-favoured, foreign commercial interests. Export performance may have been affected by more readily available trade finance and a variety of incentives to ship goods abroad or to lower the costs of imported inputs to exported goods.

In addition, although the timing has certainly differed, Brazil, India, Russia and South Africa have devalued their currencies against the US dollar during the past four years. The steady appreciation of the Chinese currency against the US dollar has, during the past 12 months, given way to a depreciation between November 2014 and March 2015 and a subsequent plateau. In a world where many exporters import components as part of regional or global supply chains, the impact of sharp currency moves are muted. However, the degree of such natural hedging almost certainly differs across sectors and national economies.

2 See Aggarwal and Evenett (2014) for Brazil; Poon (2014) on China; Chapter 2 of USITC (2014) on India; Gerasimenko (2012) for Russia; and for the new industrial policy of South Africa, launched in May 2015, see DTI (2015).


In the remainder of this chapter, the focus is on the policies taken by the BRICS and their trading partners that treat differently domestic and foreign commercial interests.

BRICS policies towards openness

Analysts have long realised that tracking changes in the relatively transparent policies towards imports, such as tariffs and import quotas, sheds liltle light on the overall commercial policy stance of nations. Be that as it may, the difficulty arises in that information on other, often murkier, policies is less readily available. One source of information is the World Trade Organization’s Excel file of measures taken by G20 members since October 2008.3 This source contains information on 1,115 policy changes by BRICS members. In contrast, the Global Trade Alert (GTA) database contains 2,344 reports on policy changes implemented by the BRICS members since November 2008. The GTA’s coverage of Russia is far greater than the WTO’s. Even in the case of South Africa, the GTA has documented 62% more government measures than the WTO (see Figure 3.3). For this reason, the GTA database is employed here to characterise the commercial policy stance of the BRICS since the onset of the global economic crisis.4

Figure 3.3 The GTA’s coverage of commerce-related policy changes is 110% larger than the WTO’s

0

100

200

300

400

500

600

700

800


Additional measures in GTA database

Number of measures in WTO Excel sheet (June 2015)

3 This source can be accessed by clicking this item Summary and Status of G-20 trade and trade-related measures since October 2008. This file tends to be updated twice a year.

4 It should be noted that both of these databases seek to capture the changes in policy of potential relevance to foreign commercial interests implemented since the onset of the global economic crisis. This is not to deny that discrimination existed before the crisis or that such discrimination had no effect during the crisis.

https://www.wto.org/english/news_e/news15_e/g20_annex_bis_june15_e.xls

https://www.wto.org/english/news_e/news15_e/g20_annex_bis_june15_e.xls


Together the BRICS have implemented 1,451 government measures that tilt the playing field against foreign commercial interests in favour of domestic rivals. The BRICS have been responsible, therefore, for 32% of the discriminatory measures taken worldwide since November 2008. Moreover, only a fifth of the discriminatory measures implemented by the BRICS have been removed, undermining claims that their protectionist response to the global economic crisis was a temporary aberration.

Figure 3.4 Together the BRICS have implemented 1,450 trade disortions since the crisis began, only 20% have been unwound

0

50

100

150

200

250

300

350

400

450

500


Trade distortions still in force Unwound trade distortions

The BRICS differ markedly in their resort to discrimination against foreign commercial interests (see Figure 3.4). India and Russia have taken approximately 450 measures that harm trading partners, in contrast to the 100 measures taken by South Africa. Of course, such counts may not reveal much about the volume of trade affected or the harm done to the BRICS or their trading partners. (For trade covered by one type of trade distortion employed by the BRICS, see Chapter 4 of this report.)

The manner in which the BRICS discriminate against foreign commercial interests differs as well (see Figure 3.5). Russia is unusual – at least compared to fellow BRICS – in resorting less often to anti-dumping and anti-subsidy tariffs (so called ‘trade defence’) and import safeguards.5 In contrast, Russia resorts more often to subsidies to domestic firms that face cross-border competition from foreign rivals. South Africa resorts to tariff increases the most, followed by Brazil an Russia. India stands out for the number of measures taken to artifically boost exports through subsidised trade finance and other incentives (Brazil and China deploy a number of such incentives as well.) China, India, and Russia have also

5 Approximately 30% of the discriminatory measures taken by the other BRICS are trade defence measures.


sought to manage their export flows through the resort to export taxes and other restrictions.6

Figure 3.5 The mix of policies used to discriminate against foreign commercial interests varies across the BRICS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Other Export taxes and restrictions Investment restrictions Buy national public procurement Trade-distorting domesticsubsidiesExport incentives and trade finance Tariff increasesTrade defence

Interesting patterns emerge when the commercial policy stance of the BRICS is compared to that of other large trading nations, specifically, the G7 industrialised countries and the non-G7 members of the G20 (almost all of which are developing countries). Figures 3.6 and 3.7 compare BRICS with these two other groups on six metrics on the degree to which they have introduced discrimination against foreign commercial interests since November 2008.

The resort to discrimination by the BRICS and by the G7 nations is remarkably similar, with the exception that the former’s policy mix has been slightly less discriminatory. Of the measures introduced by the G7 nations, 80% discriminate against foreign commercial interests, whereas the comparable figure for the BRICS is 67%. The share of product categories (tariff lines) affected by BRICS protectionism is slightly higher than that for the G7. Both groups of countries have unwound only a fifth of their crisis-era discrimination to date.

6 The most well known of these export restrictions are those in Rare Earths maintained by China and subject to litigation at the WTO.


Figure 3.6 The share of BRICS policy measures harmful to foreign commercial interests is lower than that for the G7 industrialised nations

0

.2

.4

.6

.8

1





harmful measures



unwound


that are harmful

incr

easi

ngly

prot

ectio

nist

0

.2

.4

.6

.8

1



Sharper differences emerge in the resort to discrimination by the BRICS and by the G20 members that are not part of the G7. A greater share of the latter’s policy interventions discriminate against foreign commercial interests, however, the number of product lines affected by such discrimination is less than half of that affected by BRICS protectionism.


Figure 3.7 While the BRICS imposed proportionally fewer harmful measures than the other non-G7 members of the G20, their protectionism affected many more products

0

.2

.4

.6

.8

1





harmful measures



unwound


that are harmful

incr

easi

ngly

prot

ectio

nist

0

.2

.4

.6

.8

1

BRICS average, current summitAverage of remaining G−20 members(excl. G−7 and BRICS), current summit


On the basis of the six metrics contained in these spiral diagrams, it is difficult to condemn the BRICS, at least when contrasted with other larger economies. Before letting the BRICS off the hook, however, the global reach and scale of BRICS discrimination against foreign commercial interests should be taken into account. The maps in Figures 3.8 and 3.9 may be helpful in this respect.

Figure 3.8 reveals that many nations have seen their commercial interests harmed over 300 times by actions taken by the BRICS since November 2008. Leading exporters such as Germany and the United States have been harmed particularly often – 608 and 643 times, respectively. It would be very difficult to argue that discrimination by the BRICS is limited in geographical scope and frequency.


Figu

re 3

.8

Mor

e th

an th

e oc

casi

onal

hit:

The

glo

bal r

each

of B

RIC

S tr

ade

dist

ortio

ns


Figu

re 3

.9

Art

ifici

al e

xpor

t inc

entiv

es b

y th

e B

RIC

S th

reat

en la

rge

shar

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f tra

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tner

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ts


The BRICS – Brazil, India, and China, in particular – resort to extensive tax and other incentives to boost sales in foreign markets. A list of such measures taken by the BRICS can be found towards of the end of Chapter 4 of this report, and further details are available on the Global Trade Alert website. Many of these measures involve tax refunds or reductions for firms engaged in exporting. Taken together, these artificial export incentives are not confined to a narrow range of exported goods. Indeed, over time cross-border exports of services have become eligible for such incentives in certain jurisdictions.

The problem with these artificial export incentives is that these intensify competition in overseas markets at the expense of other exporters that do not benefit from their government’s largesse. To maintain orders and market share, the latter must lower prices, reducing profit margins and the incentive to export. Artificial export incentives, therefore, beggar-thy-neighbour by reducing their exports in third markets – not in home markets, as is the case of import restrictions like tariffs and quotas.

The scale of the foreign exports that may have to compete against potentially subsidised BRICS exporters has become clear during the past six months.7 With the latest update of the GTA database, extending the calculations first reported in Evenett and Fritz (2015) concerning the exposure of the Least Developed Countries to foreign trade distortions, and using data on over 1,200 product categories, the percentage of each nation’s exports that compete against shipments from the BRICS where an export incentive is available for the product in question was calculated and reported in Figure 3.9. The results are striking. In dozens of countries, more than three-quarters of their exports face competition from BRICS exporters entitled to state-provided export incentives. In dozens more countries, more than half of their exports are at similar risk. This is a damning piece of evidence concerning the scope of harm done by the crisis-era commercial policy response of the BRICS.

Yet, completeness dictates that the resort to liberalisation or government measures that are neutral towards foreign commercial interests should be taken into account as well. As Figure 3.10 shows, the BRICS are responsible for a growing share of trade reforms and other measures that likely benefit foreign commercial interests. In the year to date, half of the world’s trade liberalising measures were implemented by the BRICS (the comparable share of discriminatory measures implemented was two-fifths). While such reforms are to be applauded, this finding is tempered by the fact that 28% of BRICS trade reforms were temporary and have already lapsed (the comparable percentage for the rest of the world is much lower at 15%).

7 The word “potentially” is used here deliberately. How much or how little tax an exporter actually pays is normally a confidential matter. An external observer – including a rival foreign firm – cannot know for sure if a firm has availed itself of a tax incentive to export. The effective size of the incentive will depend on the details of the relevant tax scheme (making its magnitude hard to compare to an explicit export subsidy). Still, the uncertainty will be taken into account by rival foreign firms and this may discourage the latter from seeking certain foreign orders.


Figure 3.10 The BRICS account for a growing share of global trade liberalisation70%

Annualised 2008

2009 2010 2011 2012 2013 2014 Year to date 2015

BRICS share of global discrimination BRICS share of global liberalisation Ratio of BRICS liberalisation to discrimination

60%

50%

40%

30%

20%

10%

0%

Similar to their resort to discriminatory measures, the BRICS differ in the manner in which they have lowered obstacles to foreign firms and investors (see Figure 3.11). In Brazil, Russia, and South Africa, over half of reforms were tariff cuts, whereas in China and India less than a quarter were. A sizeable number of reforms in China and India involved improving conditions for foreign investors and lowering or removing export taxes and other restrictions. It is worth noting, however, that almost all of the reforms undertaken by the BRICS were traditional border measures, rather than reducing subsidies or scaling back behind-the-border measures, such as local content requirements (which have become increasingly popular of late).


Figure 3.11 Brazil, Russia, and South Africa cut tariffs often; India and China’s liberalisation included tariff cuts, investment reforms, and eased export taxes and restrictions

0% 20% 40% 60% 80% 100%

Brazil

China

India

Russia

South Africa

Tariff cuts Import quotas Investment reforms Export taxes and restrictions Other

The resort by the BRICS to reforms benefiting foreign commercial interests can also be compared to other groups of large economies (see Figures 3.12 and 3.13). The proportion of policy measures involving reforms is higher in the BRICS than in the G7 industrialised countries, and a larger proportion of BRICS reforms take the form of tariff cuts. However, reforms by the large industrialised countries affect around twice as many product categories.

In contrast, when the BRICS are compared to the G20 members that are not part of the G7, on the whole the former’s reform record is more impressive. The fraction of policy changes that are reforming is larger in the BRICS, covers more product categories, and more often takes the form of transparent tariff cuts (Figure 3.13).

In sum, in relative and absolute terms, in relation to the treatment of foreign commericial interests since the onset of the global economic crisis, the record of the BRICS is mixed. The sheer scale and likely global impact of the artificial export incentives implemented by three of the BRICS is a major source of concern, however.


Figure 3.12 The BRICS policy mix is more skewed towards reform than the G7 industrialised nations, but the products benefiting from the latter were greater in number

0

.2

.4

.6

.8

1



tariff cuts





temporary


that are liberalising

incr

easi

ngly

liber

alis

ing

0

.2

.4

.6

.8

1




Figure 3.13 The BRICS record on liberalisation betters that of the non-G7 members of the G20

0

.2

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.6

.8

1



tariff cuts





temporary


that are liberalising

incr

easi

ngly

liber

alis

ing

0

.2

.4

.6

.8

1

BRICS average, current summitAverage of remaining G−20 members(excl. G−7 and BRICS), current summit


Trade distortions faced by the BRICS

Attention turns now to the discrimination faced by commercial interests in the BRICS in their operations abroad. In terms of the factors that might influence policymaking in the BRICS, such foreign discrimination may be important as it could influence the manner in which the affected interests lobby their governments. Moreover, evidence on foreign discrimination against the BRICS might be deployed to shape the priorities of these countries in the WTO, including their potential resort to dispute settlement.

One summary statistic of the scale of discrimination faced by the commercial interests of the BRICS is the total number of times each of these five countries have been adversely affected since the onset of the global economic crisis. Figure


3.14 presents this statistic by BRICS member. A total of 2,733 measures have been taken by trading partners that harm the BRICS. This implies that of the 4,563 discriminatory measures that have been recorded in the GTA database, 60% of them harm at least one of the BRICS.

Figure 3.14 The BRICS commercial interests have been hit over 2,700 times since the crisis began

0

500

1000

1500

2000

2500


Harmful measures still in effect Harmful measures no longer in effect

In terms of frequency of hits to its commercial interests, China stands out. A total of 2,153 foreign measures have harmed Chinese interests and 1,746 of these remain in force. The other BRICS have seen their commercial interests harmed between 500 and 1,000 times. In light of these findings, one might have expected the BRICS to be in the vanguard of global efforts to deter and roll back crisis-era protectionism.


Figure 3.15 Import restrictions and trade-distorting subsidies account for most of the trade distortions faced by the commercial interests of the BRICS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Other Trade-distorting domestic subsidies Export incentives and trade finance Tariff increases Trade defence

The types of discrimination faced by commercial interests are not confined to traditional forms of protectionism, namely, trade defence actions and tariff increases. In fact, only in the case of China do such border barriers account for more than half of the hits to BRICS commercial interests. Trade-distorting bailouts, export incentives, and trade finance measures also account for a sizeable share of the hits. Attempts to narrowly define, and to limit the scope of monitoring, of trade distortions would, on the basis of the evidence presented here, not be in the interests of the BRICS.


Figure 3.16 Special and differential treatment for developing countries – at the expense of the BRICS.

Distribution of responsibility for crisis-era hits to BRICS commercial interests

G7 plus Australia 20%

BRICS 32%

Rest of G20 21%

Rest of World

27%

If the declarations following meetings of the trade ministers of the BRICS are anything to go by, the attitude taken by the emergent economic powers is ambivalent towards protectionism. For sure, protectionism is often condemned. However, caveats are repeatedly made that give rise to the impression that protectionism is fine if undertaken by developing countries under the guise of ‘special and differential treatment’.8 The latter principle has been advanced by many developing countries at the WTO in an attempt to ensure less far-reaching restraints on their policymaking as compared to industrialised countries. And, of course, the group of developing countries includes the BRICS.

The wisdom of this approach to crisis-era protectionism should be called into question. The GTA database allows the perpetrators of crisis-era discrimination against BRICS commercial interests to be identified. The groups of countries responsible for the 2,733 hits to the BRICS are shown in Figure 3.16. The G7 industrialised countries plus Australia are responsible for a fifth of the hits. Nearly a third of the hits against the commercial interests of the BRICS were implemented by a member of this group. Other developing country members of the G20 were responsible for another fifth. Taken together, 73% of the hits to BRICS exporters, foreign investors, and nationals working abroad were undertaken by members of the G20 group.

8 For example, the 2014 declaration of BRICS trade ministers stated that, “they [the ministers] reaffirmed their commitment to refrain from trade protectionist measures that are incompatible with WTO obligations, while respecting the special and differential treatment for developing countries.“


These findings suggest that the BRICS would be better served by reorienting their approach towards protectionism away from making excuses for the harm done by developing countries to confronting the resort to discrimination by fellow G20 members. In addition, the trade ministers of the BRICS would do well to curb their hits to each others’ commercial interests. The number of times each member of the BRICS has hit another member of this group is reported in Table 1.1 in this report, and gives a poor impression of the actual degree of solidarity among the rising economic powers.

Concluding remarks

The goal of this chapter was to summarise important aspects of the commercial policy stance of the BRICS during the crisis era, and the chapter included comparisons among these five nations and between this group and other groups of large economies. Steps taken to benefit as well as harm foreign commercial interests were considered, as were steps taken by the trading partners of the BRICS against the latter’s exporters, investors, and nationals working abroad. Several conclusions arose from this analysis of the latest available data.

First, while the BRICS resorted often to discrimination against foreign commercial interests, they have frequently lowered trade barriers and made life easier for foreign investors as well. Second, this mixed record should not be used to absolve the BRICS. After all, quite a lot of their trade reforms were temporary and have already lapsed. Plus, the artificial export incentives put in place during the crisis era by Brazil, India, and China are likely to have distorted conditions of competition in many, many markets around the globe. As the scale and effects of these export-related trade distortions become better known, they are likely to become a source of contention with trading partners.

Third, the BRICS need to revisit their trade strategy. By turning a blind eye to protectionism by developing countries, the BRICS have shifted their attention to the discrimination undertaken by industrialised countries. It is right and proper to condemn discrimination by the latter. However, developing countries are responsible for four-fifths of the discrimination against BRICS, emphasising the worldwide nature of the problem.

Fourth, the worldwide nature of the challenge facing the BRICS here calls for their agitation at the WTO and at the G20 against protectionism and in favour of its reversal over time. Lastly, when the BRICS trade ministers meet they ought not to forget that a third of the discrimination against their group’s interests is undertaken by the very governments sitting around the conference table.

References

Aggarwal, V. and S. J. Evenett (2012), “Do WTO rules preclude industrial policy? Evidence from the global economic crisis”, Business & Politics 16.


DTI (2015),. Industrial Policy Action Plan 2015, Department of Trade and Industry, Government of South Africa.

Evenett, S. J. and J. Fritz (2015). Throwing Sand In The Wheels: How Foreign Trade Distortions Slowed LDC Export-Led Growth, London: CEPR Press.

Gerasimenko, D. (2012) “Russia’s commercial policy, 2008-11: modernization, crisis, and the WTO accession” Oxford Review of Economic Policy 28(2), pp. 301-323.

IMF (2015), World Economic Outlook, Chapter 1, Washington, DC. OECD (2015), “International trade slows sharply in first quarter of 2015”, 28 May

(available at http://www.oecd.org/std/its/OECD-Trade-Q12015.pdf).Poon, D. (2014), “China’s Development Trajectory: A Strategic Opening For

Industrial Policy In The South”, United Nations Conference on Trade and Development, December.

USITC (2014), Trade, Investment, and Industrial Policies in India: Effects on the United States, United States International Trade Commission, December.

http://www.oecd.org/std/its/OECD-Trade-Q12015.pdf

81

Introduction

The coherence of a nation’s policies with its stated objectives is one standard that governments are held to.1 Enhancing the integration of the almost 50 Least Developed Countries (LDCs) into the world economy is a long-standing and widely accepted objective of national trade and development policies and of the United Nations and the membership of the WTO.

The BRICS have signed up to these goals as well. Indeed, some of the BRICS have claimed to speak on behalf of developing countries, including the LDCs, at the WTO. From time to time such support manifests itself in statements made by the BRICS individually and collectively. For example, much has been made of the need for appropriate international financial aid to support LDCs and other poor countries implement the Trade Facilitation Agreement, agreed by WTO members in December 2013.2

The purpose of this chapter is to highlight one important area of incoherence between this stated goal and the commercial policy choices of the BRICS. The argument advanced here is not that the BRICS alone have trade policies that are not aligned with the goal of promoting LDC integration into the global economy. Other governments can be criticised on these grounds as well. However, the scale of the BRICS policies that will be highlighted here is of particular systemic concern.

This chapter builds on a small, growing literature on the impact of financial incentives offered by governments to their exporters. While these incentives seek to boost the contribution of exports to national economic growth, they can beggar-thy-neighbour by shifting sales in third markets away from other exporting nations. In the case of the LDCs, which have fewer resources available to them, this is particularly unwelcome as their governments are unlikely to be able to match any subsidies offered by their trading partners. Such export-related

1 Another legitimate question is whether a nation’s policies are effective or offer value for money. Coherence, however, may well be a necessary condition for effectiveness. The focus in this chapter is on coherence.

2 At their summit in 2014, the heads of government of the BRICS declared, “[w]e look forward to the implementation of the Agreement on Trade Facilitation. We call upon international partners to provide support to the poorest, most vulnerable WTO members to enable them to implement this Agreement, which should support their development objectives.“ The text of that summit’s declaration can be found at http://brics6.itamaraty.gov.br/category-english/21-documents/223-sixth-summit-declaration-and-action-plan.

4 The threat to LDC exports posed by the BRICS




financial incentives are likely to limit, or even reduce, the extent to which LDCs integrate into the world economy.

The reach of export incentives employed by the BRICS

Governments can enhance the incentive for national firms to export through a number of means. These include trade finance, explicit subsidies per amount exported, and rebates or reductions on taxes for exporting. The transparency, cost, and impact of these different policy options may differ substantially. For example, tax-based incentives may be buried in national legislation and not be immediately apparent to trading partners. Given one of the defining features of the BRICS has been their growing share of international trade, and therefore of world exports, it is noteworthy that extensive incentives exist in these jurisdictions for exporters.

Figure 4.1 Four-fifths of LDC exports of goods other than commodities face competition from BRICS rivals eligible for export incentives

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

2009 2010 2011 2012 2013 2014 2015

Share of all LDC exports facing subsidised BRICS rival in third markets

During the past three years the evidence concerning the extent of such export incentives has grown. First, the Global Trade Alert team began documenting and publishing information on such measures. Then, Evenett et al. (2012) assembled the available evidence and demonstrated how China had scaled up its incentives to exports – principally through more generous value added tax rebates for exporters –once the global economic crisis got under way. They argued that the fine-grained manner in which China increased and reduced these incentives over time amounted to nothing less than a policy of managed exports.

The threat to LDC exports posed by the BRICS 83

Goudon et al. (2014) provided statistical estimates of the impact of these Chinese incentives on that nation’s exports, taking account of the considerable variation across products and time in the magnitude of the incentives offered. Interestingly, they found these Chinese incentives had considerable impact.

Using detailed product-level data and data on bilateral trade flows, Evenett and Fritz (2015) demonstrated the extent to which LDC exporters faced subsidised foreign rivals in third markets as part of a study of the impact of crisis-era trade distortions on LDC exports. They found that all such distortions held back LDC exports by 31%, or a quarter of a trillion US dollars, over the years 2009 to 2013. State-provided export incentives accounted for the lion’s share of the harm done to LDC exporters.

As the Global Trade Alert database was updated for this report, the opportunity was taken to prepare estimates of the percentage of LDC exports that face subsidised exports from the BRICS.3 Given that a considerable share of LDC exports are commodities, care was taken to prepare estimates for all LDC exports and for all non-commodity LDC exports.The findings are summarised in Figure 4.1. The percentage of LDC exports of goods other than commodites that face competition from subsidised BRICS rivals in third markets has risen over time and now stands at over 80%.

Changes in the state incentives for commodity exports accounts for the differences over time in the total amount of LDC exports exposed. At a minimum, during the years 2009 to 2013 it can be said that LDC exposure to artificially subsidised exports from the BRICS has been substantial. The BRICS have called for the integration of the LDCs into the world economy on the one hand, but have then taken steps to frustrate that outcome on the other. This is a classic example of policy incoherence.

Table 4.1 Export incentives by Brazil, China, and India pose particular threats to LDC export performance

Implementing jurisdiction

Share of LDC exports affected by export incentives in force

today (June 2015)

Share of LDC exports affected by export incentives in force

today, excluding commodities.

Brazil 12.01% 25.65%

China 25.36% 57.70%

Russian Federation 1.01% 1.33%

India 27.82% 60.86%

South Africa 0.04% 0.09%

3 One concern in making these calculations is that as these export incentives are increased the amount of LDC exports falls, affecting the computed percentages. To overcome this problem, the shares of LDC exports by product and by export destination for the pre-crisis years 2005 to 2007 were used in the computation of the percentages reported here. In their earlier study, Evenett and Fritz (2015) used a range of weighting schemes and this was not found to markedly affect the findings.


The BRICS are not equally responsible for this incoherence, as Tables 4.1 and 4.2 make clear. Table 4.1 identifies the percentages of LDC exports that face subsidised exports from each BRICS nation. Brazil, China, and India stand out as offering incentives that harm the commercial interests of the LDCs. Table 4.2 (in the Appendix) lists the 46 different export incentives offered by Brazil, China, India, and the Russian Federation that involve products that compete with 1% or more of LDC exports other than commodities. The government measures listed in Table 4.2 are listed in order of diminishing threat to LDC exports and indicate the number of product categories (on the United Nations’ 4-digit product codes) where subsidised BRICS exporters compete with LDC rivals. The findings in these tables highlight the systemic nature of the harm done by the BRICS to the most vulnerable economies on Earth.

Concluding remarks

In international trade circles much is made of the solidarity among developing countries. The evidence presented in this chapter suggests such talk of solidarity is exactly that – talk, at least as far as the BRICS are concerned. An important feature of the crisis-era commercial policy response of the BRICS has been to ramp up incentives for exporters, many of whom compete in third markets with firms based in the Least Developed Countries. It is not going too far to say that some of the vaunted export growth of the rising economic powers has come at the expense of the Least Developed Countries. This is not just an example of beggar-thy-neighbour policy, it is beggar-thy-poor-neighbour.

References

Evenett, S. J. and J. Fritz (2015), Throwing Sand In The Wheels: How Foreign Trade Distortions Slowed LDC Export-Led Growth, London: CEPR Press.

Evenett, S. J., J. Fritz and Y. C. Jing (2012), “Beyond dollar exchange-rate targeting: China’s crisis-era export management regime”, Oxford Review of Economic Policy 28, 284-300.

Gourdron, J., S. Monjon, and S. Poncet (2014), “Incomplete VAT Rebates to Exporters: How Do they Affect China’s Export Performance?”, CEPII Working Paper No. 2014-05.


App

endi

x

Tabl

e 4.

2 Li

st o

f 46

stat

e-pr

ovid

ed e

xpor

t inc

entiv

es p

rovi

ded

by th

e B

RIC

S th

at c

ompe

te w

ith 1

% o

r m

ore

of th

e no

n-co

mm

odity

ex

port

s of

the

LDC

s

BR

ICS

mem

ber

resp

onsi

ble

Title

of m

easu

re in

the

GTA

dat

abas

eM

easu

re

in fo

rce

in

June

201

5?

Year

mea

sure

im

plem

ente

d

Year

m

easu

re

laps

ed, i

f an

y

Num

ber

of 4

-dig

it ta

riff

lines

af

fect

ed

Num

ber

of ta

riff

lines

w

here

impl

emen

ter

com

pete

s w

ith a

LD

C

in a

thir

d m

arke

t in

the

year

pri

or to

im

plem

enta

tion

Perc

enta

ge

of a

ll LD

C

expo

rts

expo

sed

to

this

exp

ort

ince

ntiv

e

Perc

enta

ge

of n

on-

com

mod

ity

LDC

exp

orts

ex

pose

d to

th

is e

xpor

t in

cent

ive

Bra

zil

Bra

zil:

Publ

ic fi

nanc

ing

for

the

prod

uctio

n of

goo

ds fo

r ex

port

s by

sm

all a

nd m

ediu

m

com

pani

es (p

re-s

hipm

ent p

hase

)N

o20

0920

1370

617

459

.74%

37.7

5%

Indi

aIn

dia:

Am

endm

ents

to s

ever

al e

xpor

t sc

hem

es u

nder

the

fore

ign

trad

e po

licy

2009

-14

No

2013

2015

838

226

24.8

1%56

.32%

Indi

aIn

dia:

Pre

and

pos

t shi

pmen

t exp

ort c

redi

tN

o20

0820

1013

665

21.9

9%50

.03%

Indi

aIn

dia:

Ext

ensi

on o

f ser

vice

tax

refu

nd fo

r ex

port

ers

Yes

2008

-13

564

21.9

9%50

.03%

Indi

aIn

dia:

Inte

rest

sub

vent

ion

sche

me

for

desi

gnat

ed e

xpor

tsN

o20

0820

1411

357

20.8

8%47

.51%

Indi

aIn

dia:

New

For

eign

Tra

de P

olic

y 20

15-2

0 an

noun

ced

Yes

2015

2020

551

158

20.3

9%46

.40%

Indi

aIn

dia:

201

0-11

sup

plem

ent t

o th

e fo

reig

n tr

ade

polic

y 20

09-1

4N

o20

1120

1514

368

18.4

1%41

.88%

Indi

aIn

dia:

Ince

ntiv

es fo

r le

athe

r an

d te

xtile

se

ctor

exp

orts

No

2009

2009

108

5517

.97%

40.8

8%

Indi

aIn

dia:

Sub

sidy

sch

eme

to fa

cilit

ate

expo

rts

No

2012

2014

227

7017

.67%

40.1

9%


BR

ICS

mem

ber

resp

onsi

ble

Title

of m

easu

re in

the

GTA

dat

abas

eM

easu

re

in fo

rce

in

June

201

5?

Year

mea

sure

im

plem

ente

d

Year

m

easu

re

laps

ed, i

f an

y

Num

ber

of 4

-dig

it ta

riff

lines

af

fect

ed

Num

ber

of ta

riff

lines

w

here

impl

emen

ter

com

pete

s w

ith a

LD

C

in a

thir

d m

arke

t in

the

year

pri

or to

im

plem

enta

tion

Perc

enta

ge

of a

ll LD

C

expo

rts

expo

sed

to

this

exp

ort

ince

ntiv

e

Perc

enta

ge

of n

on-

com

mod

ity

LDC

exp

orts

ex

pose

d to

th

is e

xpor

t in

cent

ive

Chi

naC

hina

: New

VAT

reb

ates

for

expo

rter

s of

24

6 pr

oduc

tsYe

s20

15-

207

8817

.46%

39.7

3%

Indi

aIn

dia:

Inte

rest

sub

vent

ion

sche

me

for

rupe

e ex

port

cre

dit e

xten

ded

to 2

013

and

num

ber

of s

ecto

rs in

crea

sed

No

2012

2014

134

6617

.42%

39.6

5%

Indi

aIn

dia:

Inte

rest

cre

dit u

nder

inte

rest

su

bven

tion

sche

me

for

rupe

e ex

port

cre

dit

incr

ease

d fr

om 2

% to

3%

No

2013

2014

319

105

17.2

7%39

.30%

Indi

aIn

dia:

201

0-11

sup

plem

ent t

o th

e fo

reig

n tr

ade

polic

y 20

09-1

4N

o20

1020

1514

863

17.1

5%39

.02%

Chi

naC

hina

: VAT

reb

ate

of 1

5 pe

rcen

t for

text

ile

prod

ucts

Yes

2009

-12

554

16.8

8%38

.40%

Indi

aIn

dia:

Ince

ntiv

es fo

r le

athe

r pr

oduc

ts,

garm

ents

exp

orte

d to

EU

and

USA

Yes

2009

-39

3415

.23%

34.6

6%

Indi

aIn

dia:

Tem

pora

ry in

cent

ive

for

expo

rts

of

read

ymad

e ga

rmen

ts to

EU

and

USA

No

2010

2010

3229

15.0

2%34

.17%

Bra

zil

Bra

zil:

Ref

orm

of t

he n

atio

nal E

xpor

t Fi

nanc

ing

Prog

ram

me

PRO

EXYe

s20

14-

572

128

9.72

%20

.43%

Indi

aIn

dia:

Exp

ansi

on o

f pro

duct

and

mar

ket

rang

e fo

r ex

port

sub

sidy

und

er F

orei

gn

Trad

e Po

licy

2009

-14

No

2013

2015

107

468.

48%

19.3

0%

Chi

naC

hina

: VAT

reb

ates

for

mor

e th

an 2

600

prod

ucts

Yes

2009

-33

911

55.

97%

13.5

9%


BR

ICS

mem

ber

resp

onsi

ble

Title

of m

easu

re in

the

GTA

dat

abas

eM

easu

re

in fo

rce

in

June

201

5?

Year

mea

sure

im

plem

ente

d

Year

m

easu

re

laps

ed, i

f an

y

Num

ber

of 4

-dig

it ta

riff

lines

af

fect

ed

Num

ber

of ta

riff

lines

w

here

impl

emen

ter

com

pete

s w

ith a

LD

C

in a

thir

d m

arke

t in

the

year

pri

or to

im

plem

enta

tion

Perc

enta

ge

of a

ll LD

C

expo

rts

expo

sed

to

this

exp

ort

ince

ntiv

e

Perc

enta

ge

of n

on-

com

mod

ity

LDC

exp

orts

ex

pose

d to

th

is e

xpor

t in

cent

ive

Bra

zil

Bra

zil:

Ree

stab

lishm

ent o

f REI

NTE

GR

A

tax

refu

nd p

rogr

am fo

r ex

port

ers

Yes

2014

-57

410

65.

97%

13.5

9%

Bra

zil

Bra

zil:

Spec

ial t

ax r

efun

d pr

ogra

mm

e R

EIN

TEG

RA

for

expo

rter

s of

loca

lly

prod

uced

man

ufac

ture

d go

ods

No

2011

2013

572

107

5.62

%12

.79%

Indi

aIn

dia:

Inte

rest

sub

vent

ion

sche

me

for

rupe

e ex

port

cre

dit e

xten

ded

to a

dditi

onal

se

ctor

sN

o20

1020

1149

324.

45%

10.1

3%

Bra

zil

Bra

zil:

new

cre

dit l

ine

for

expo

rts

of

cons

umer

goo

dsN

o20

1020

1116

645

4.11

%9.

23%

Indi

aIn

dia:

New

pro

duct

s ad

ded

unde

r m

arke

t lin

ked

focu

s pr

oduc

t sch

eme

from

1

Janu

ary

2010

No

2010

2014

2615

2.85

%4.

53%

Indi

aIn

dia:

Add

ition

al in

cent

ives

und

er e

xpor

t sc

hem

es o

f the

For

eign

Tra

de P

olic

y 20

09-1

4N

o20

1220

1597

402.

42%

5.50

%

Chi

naC

hina

: Inc

reas

ed V

AT r

ebat

es fo

r ex

port

s of

food

, min

eral

, che

mic

al a

nd w

ood

prod

ucts

Yes

2008

-88

252.

40%

5.47

%

Chi

naC

hina

: Inc

reas

ed V

AT r

ebat

es fo

r fo

od,

text

iles,

woo

d pr

oduc

ts, m

etal

s, c

hem

ical

s an

d m

achi

nery

Yes

2008

-24

267

2.32

%5.

29%


BR

ICS

mem

ber

resp

onsi

ble

Title

of m

easu

re in

the

GTA

dat

abas

eM

easu

re

in fo

rce

in

June

201

5?

Year

mea

sure

im

plem

ente

d

Year

m

easu

re

laps

ed, i

f an

y

Num

ber

of 4

-dig

it ta

riff

lines

af

fect

ed

Num

ber

of ta

riff

lines

w

here

impl

emen

ter

com

pete

s w

ith a

LD

C

in a

thir

d m

arke

t in

the

year

pri

or to

im

plem

enta

tion

Perc

enta

ge

of a

ll LD

C

expo

rts

expo

sed

to

this

exp

ort

ince

ntiv

e

Perc

enta

ge

of n

on-

com

mod

ity

LDC

exp

orts

ex

pose

d to

th

is e

xpor

t in

cent

ive

Indi

aIn

dia:

Exe

mpt

ion

from

exc

ise

duty

for

expo

rter

s un

der

Focu

s Pr

oduc

t Sch

eme

No

2012

2015

270

912.

23%

5.08

%

Bra

zil

Bra

zil:

Exte

nsio

n of

the

Bra

zilia

n D

raw

back

Sys

tem

Yes

2010

-84

332.

13%

4.85

%

Indi

aIn

dia:

Fin

anci

al a

ssis

tanc

e to

fish

ex

port

ers

No

2010

2012

76

1.96

%4.

45%

Indi

aIn

dia:

Exe

mpt

ion

from

exc

ise

duty

for

expo

rter

s un

der

Focu

s M

arke

t Sch

eme

No

2012

2015

475

771.

93%

4.39

%

Indi

aIn

dia:

Low

er v

alue

add

ition

req

uire

men

ts

unde

r Adv

ance

Aut

hori

zatio

n Sc

hem

eYe

s20

10-

11

1.89

%4.

30%

Chi

naC

hina

: Inc

reas

ed V

AT r

ebat

es fo

r 55

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PART THREE

Crisis-era policy choice by and affecting the BRICS

Note: As the Global Trade Alert database is updated frequently, the above data will change.

The BRICS’ resort to protectionism: Country tables 93B

RA

ZIL

BrazilTable 5.1. Foreign state measures affecting Brazil’s commercial interests

Summary statistic of foreign state measures affecting Brazil’s commercial interests

All measures

All measures except anti-dumping,

anti-subsidy, and safeguard

actions

ALL MEASURESTotal number of measures affecting Brazil’s commercial interests 1383 1299

Total number of foreign measures found to benefit, or involve no change in the treatment of, Brazil’s commercial interests

413 411

Total number of announced, currently unimplemented foreign measures that would almost certainly harm Brazil’ interests

88 56

Total number of foreign implemented measures that likely harm Brazil’s commercial interests

160 159

Total number of foreign measures that have been implemented and which almost certainly discriminate against Brazil’s interests

724 675

Percentage of foreign measures that benefited or were neutral towards Brazil’s commercial interests

29.9 31.6

Percentage of foreign measures that harm Brazil’s commercial interests 63.9 64.2

MEASURES STILL IN FORCETotal number of implemented foreign measures still affecting Brazil’s commercial interests

898 858

Total number of implemented measures that likely harmed or almost certainly harmed Brazil’s commercial interests

646 608

Total number of implemented measures that almost certainly harmed Brazil’s commercial interests

536 498

Percentage of foreign measures still in force that harm Brazil’s commercial interests

71.9 70.9

PENDING MEASURESTotal number of pending measures that might affect Brazil’s commercial interests

105 73

Total number of pending measures that, if implemented, are likely to harm Brazil’s commercial interests

88 56

Percentage of pending foreign measures that threaten Brazil’s commercial interests

83.8 76.7

MEASURES NO LONGER IN FORCETotal number of implemented measures that affected Brazil’s commercial interests and are no longer in force

380 368

Total number of implemented measures that likely harmed or almost certainly harmed Brazil’s interests which are no longer in force

236 224

Total number of implemented measures that almost certainly harmed Brazil’s commercial interests which are no longer in force

188 177

Percentage of crisis-era foreign measures that harmed Brazil’s commercial interests which have been unwound

26.7 26.9

TRADING PARTNERS RESPONSIBLETotal number of trading partners that have imposed measures that are currently in force and that harm Brazil’s commercial interests

81 81


RA

ZIL

Table 5.2. Brazil’s state measures affecting other jurisdictions’ commercial interests

Summary statistic of foreign state measures affecting Brazil’s commercial interests

All measures


anti-subsidy, and safe-guard

actions

ALL MEASURESTotal number of announced or implemented measures by Brazil 521 393

Total number of Brazil’s measures found to benefit or involve no change in the treatment of other jurisdictions' commercial interests

233 231

Total number of announced measures by Brazil that if implemented would almost certainly harm foreign interests

38 3

Total number of implemented measures by Brazil that likely harm foreign interests

28 28

Total number of Brazil’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

222 131

Percentage of Brazil’s measures that harm foreign commercial interests

48 40.5

MEASURES STILL IN FORCETotal number of Brazil’s measures found to benefit or involve no change in the treatment of other jurisdictions’ commercial interests

125 123

Total number of Brazil’s measures that have been implemented and are likely to harm foreign commercial interests

21 21

Total number of Brazil’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

182 101

Percentage of Brazil’s measures still in force that harm foreign commercial interests

61.9 49.8

COMMERCE AFFECTEDTotal number of 4-digit tariff lines affected by measures implemented by Brazil that harm foreign interests (maximum 1229)

976 975

Total number of 2-digit sectors affected by measures implemented by Brazil that harm foreign commercial interests (maximum 69)

58 58

Total number of trading partners affected by measures implemented by Brazil that harm foreign commercial interests

210 209

The BRICS’ resort to protectionism: Country tables 95C

HIN

A

ChinaTable 5.3. Foreign state measures affecting China’s commercial interests

Summary statistic of foreign state measures affecting China’s commercial interests

All measures



actions

ALL MEASURESTotal number of measures affecting China’s commercial interests 3282 2364

Total number of foreign measures found to benefit, or involve no change in the treatment of, China’s commercial interests

820 818

Total number of announced, currently unimplemented foreign measures that would almost certainly harm China’ interests

312 94

Total number of foreign implemented measures that likely harm China’s commercial interests

233 230

Total number of foreign measures that have been implemented and which almost certainly discriminate against China’s interests

1922 1227

Percentage of foreign measures that benefited or were neutral towards China’s commercial interests

25 34.6

Percentage of foreign measures that harm China’s commercial interests 65.7 61.6

MEASURES STILL IN FORCETotal number of implemented foreign measures still affecting China’s commercial interests

2266 1672

Total number of implemented measures that likely harmed or almost certainly harmed China’s commercial interests

1747 1155

Total number of implemented measures that almost certainly harmed China’s commercial interests

1562 972

Percentage of foreign measures still in force that harm China’s commercial interests

77.1 69.1

PENDING MEASURESTotal number of pending measures that might affect China’s commercial interests

339 121

Total number of pending measures that, if implemented, are likely to harm China’s commercial interests

312 94

Percentage of pending foreign measures that threaten China’s commercial interests

92 77.7

MEASURES NO LONGER IN FORCETotal number of implemented measures that affected China’s commercial interests and are no longer in force

680 574

Total number of implemented measures that likely harmed or almost certainly harmed China’s interests which are no longer in force

405 299

Total number of implemented measures that almost certainly harmed China’s commercial interests which are no longer in force

360 255

Percentage of crisis-era foreign measures that harmed China’s commercial interests which have been unwound

18.8 20.5

TRADING PARTNERS RESPONSIBLETotal number of trading partners that have imposed measures that are currently in force and that harm China’s commercial interests

102 98

96 The BRICS Trade Strategy: Time for a RethinkC

HIN

ATable 5.4. China’s state measures affecting other jurisdictions’ commercial interests

Summary statistic of foreign state measures affecting China’s commercial interests

All measures



actions

ALL MEASURESTotal number of announced or implemented measures by China 322 255

Total number of China’s measures found to benefit or involve no change in the treatment of other jurisdictions' commercial interests

100 100

Total number of announced measures by China that if implemented would almost certainly harm foreign interests

18 5

Total number of implemented measures by China that likely harm foreign interests

45 45

Total number of China’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

159 105

Percentage of China’s measures that harm foreign commercial interests

63.4 58.8

MEASURES STILL IN FORCETotal number of China’s measures found to benefit or involve no change in the treatment of other jurisdictions’ commercial interests

80 80

Total number of China’s measures that have been implemented and are likely to harm foreign commercial interests

33 33

Total number of China’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

125 83

Percentage of China’s measures still in force that harm foreign commercial interests

66.4 59.2

COMMERCE AFFECTEDTotal number of 4-digit tariff lines affected by measures implemented by China that harm foreign interests (maximum 1229)

933 929

Total number of 2-digit sectors affected by measures implemented by China that harm foreign commercial interests (maximum 69)

61 61

Total number of trading partners affected by measures implemented by China that harm foreign commercial interests

201 200

The BRICS’ resort to protectionism: Country tables 97IN

DIA

IndiaTable 5.5. Foreign state measures affecting India’s commercial interests

Summary statistic of foreign state measures affecting India’s commercial interests

All measures



actions

ALL MEASURESTotal number of measures affecting India’s commercial interests 1718 1558

Total number of foreign measures found to benefit, or involve no change in the treatment of, India’s commercial interests

585 584

Total number of announced, currently unimplemented foreign measures that would almost certainly harm India’ interests

132 70

Total number of foreign implemented measures that likely harm India’s commercial interests

176 175

Total number of foreign measures that have been implemented and which almost certainly discriminate against India’s interests

829 733

Percentage of foreign measures that benefited or were neutral towards India’s commercial interests

34.1 37.5

Percentage of foreign measures that harm India’s commercial interests 58.5 58.3

MEASURES STILL IN FORCETotal number of implemented foreign measures still affecting India’s commercial interests

1152 1074

Total number of implemented measures that likely harmed or almost certainly harmed India’s commercial interests

797 720

Total number of implemented measures that almost certainly harmed India’s commercial interests

664 587

Percentage of foreign measures still in force that harm India’s commercial interests

69.2 67

PENDING MEASURESTotal number of pending measures that might affect India’s commercial interests

152 90

Total number of pending measures that, if implemented, are likely to harm India’s commercial interests

132 70

Percentage of pending foreign measures that threaten India’s commercial interests

86.8 77.8

MEASURES NO LONGER IN FORCETotal number of implemented measures that affected India’s commercial interests and are no longer in force

416 396

Total number of implemented measures that likely harmed or almost certainly harmed India’s interests which are no longer in force

205 185

Total number of implemented measures that almost certainly harmed India’s commercial interests which are no longer in force

165 146

Percentage of crisis-era foreign measures that harmed India’s commercial interests which have been unwound

20.4 20.4

TRADING PARTNERS RESPONSIBLETotal number of trading partners that have imposed measures that are currently in force and that harm India’s commercial interests

97 96


DIA

Table 5.6. India’s state measures affecting other jurisdictions’ commercial interests

Summary statistic of foreign state measures affecting India’s commercial interests

All measures



actions

ALL MEASURESTotal number of announced or implemented measures by India 676 475

Total number of India’s measures found to benefit or involve no change in the treatment of other jurisdictions' commercial interests

173 172

Total number of announced measures by India that if implemented would almost certainly harm foreign interests

50 3

Total number of implemented measures by India that likely harm foreign interests

40 40

Total number of India’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

413 260

Percentage of India’s measures that harm foreign commercial interests

67 63.2

MEASURES STILL IN FORCETotal number of India’s measures found to benefit or involve no change in the treatment of other jurisdictions’ commercial interests

149 148

Total number of India’s measures that have been implemented and are likely to harm foreign commercial interests

34 34

Total number of India’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

342 207

Percentage of India’s measures still in force that harm foreign commercial interests

71.6 62

COMMERCE AFFECTEDTotal number of 4-digit tariff lines affected by measures implemented by India that harm foreign interests (maximum 1229)

1174 1173

Total number of 2-digit sectors affected by measures implemented by India that harm foreign commercial interests (maximum 69)

51 51

Total number of trading partners affected by measures implemented by India that harm foreign commercial interests

212 211

The BRICS’ resort to protectionism: Country tables 99R

USSIA

N FED

ERA

TION

Russian FederationTable 5.7. Foreign state measures affecting Russia’s commercial interests

Summary statistic of foreign state measures affecting Russia’s commercial interests

All measures



actions

ALL MEASURESTotal number of measures affecting Russia’s commercial interests 1189 1090

Total number of foreign measures found to benefit, or involve no change in the treatment of, Russia’s commercial interests

364 364

Total number of announced, currently unimplemented foreign measures that would almost certainly harm Russia’ interests

81 38

Total number of foreign implemented measures that likely harm Russia’s commercial interests

127 127

Total number of foreign measures that have been implemented and which almost certainly discriminate against Russia’s interests

619 563

Percentage of foreign measures that benefited or were neutral towards Russia’s commercial interests

30.6 33.4

Percentage of foreign measures that harm Russia’s commercial interests 62.7 63.3

MEASURES STILL IN FORCETotal number of implemented foreign measures still affecting Russia’s commercial interests

783 734

Total number of implemented measures that likely harmed or almost certainly harmed Russia’s commercial interests

554 505

Total number of implemented measures that almost certainly harmed Russia’s commercial interests

462 413

Percentage of foreign measures still in force that harm Russia’s commercial interests

70.8 68.8

PENDING MEASURESTotal number of pending measures that might affect Russia’s commercial interests

89 46

Total number of pending measures that, if implemented, are likely to harm Russia’s commercial interests

81 38

Percentage of pending foreign measures that threaten Russia’s commercial interests

91 82.6

MEASURES NO LONGER IN FORCETotal number of implemented measures that affected Russia’s commercial interests and are no longer in force

318 311

Total number of implemented measures that likely harmed or almost certainly harmed Russia’s interests which are no longer in force

191 184

Total number of implemented measures that almost certainly harmed Russia’s commercial interests which are no longer in force

157 150

Percentage of crisis-era foreign measures that harmed Russia’s commercial interests which have been unwound

25.6 26.7

TRADING PARTNERS RESPONSIBLETotal number of trading partners that have imposed measures that are currently in force and that harm Russia’s commercial interests

80 80

100 The BRICS Trade Strategy: Time for a RethinkR

USS

IAN

FED

ERA

TIO

NTable 5.8. Russia’s state measures affecting other jurisdictions’ commercial interests

Summary statistic of foreign state measures affecting Russia’s commercial interests

All measures



actions

ALL MEASURESTotal number of announced or implemented measures by Russia 659 615

Total number of Russia’s measures found to benefit or involve no change in the treatment of other jurisdictions' commercial interests

170 170

Total number of announced measures by Russia that if implemented would almost certainly harm foreign interests

43 31

Total number of implemented measures by Russia that likely harm foreign interests

43 43

Total number of Russia’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

403 371

Percentage of Russia’s measures that harm foreign commercial interests

67.7 67.3

MEASURES STILL IN FORCETotal number of Russia’s measures found to benefit or involve no change in the treatment of other jurisdictions’ commercial interests

122 122

Total number of Russia’s measures that have been implemented and are likely to harm foreign commercial interests

39 39

Total number of Russia’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

293 284

Percentage of Russia’s measures still in force that harm foreign commercial interests

73.1 72.6

COMMERCE AFFECTEDTotal number of 4-digit tariff lines affected by measures implemented by Russia that harm foreign interests (maximum 1229)

864 861

Total number of 2-digit sectors affected by measures implemented by Russia that harm foreign commercial interests (maximum 69)

63 63

Total number of trading partners affected by measures implemented by Russia that harm foreign commercial interests

169 167

The BRICS’ resort to protectionism: Country tables 101SO

UTH

AFR

ICA

South AfricaTable 5.9. Foreign state measures affecting South Africa’s commercial interests

Summary statistic of foreign state measures affecting South Africa’s commercial interests

All measures



actions

ALL MEASURESTotal number of measures affecting South Africa’s commercial interests 1079 1033

Total number of foreign measures found to benefit, or involve no change in the treatment of, South Africa’s commercial interests

364 363

Total number of announced, currently unimplemented foreign measures that would almost certainly harm South Africa’ interests

69 53

Total number of foreign implemented measures that likely harm South Africa’s commercial interests

137 137

Total number of foreign measures that have been implemented and which almost certainly discriminate against South Africa’s interests

512 483

Percentage of foreign measures that benefited or were neutral towards South Africa’s commercial interests

33.7 35.1

Percentage of foreign measures that harm South Africa’s commercial interests

60.1 60

MEASURES STILL IN FORCETotal number of implemented foreign measures still affecting South Africa’s commercial interests

709 685

Total number of implemented measures that likely harmed or almost certainly harmed South Africa’s commercial interests

488 465

Total number of implemented measures that almost certainly harmed South Africa’s commercial interests

391 368

Percentage of foreign measures still in force that harm South Africa’s commercial interests

68.8 67.9

PENDING MEASURESTotal number of pending measures that might affect South Africa’s commercial interests

81 65

Total number of pending measures that, if implemented, are likely to harm South Africa’s commercial interests

69 53

Percentage of pending foreign measures that threaten South Africa’s commercial interests

85.2 81.5

MEASURES NO LONGER IN FORCETotal number of implemented measures that affected South Africa’s commercial interests and are no longer in force

289 283

Total number of implemented measures that likely harmed or almost certainly harmed South Africa’s interests which are no longer in force

158 152

Total number of implemented measures that almost certainly harmed South Africa’s commercial interests which are no longer in force

120 114

Percentage of crisis-era foreign measures that harmed South Africa’s commercial interests which have been unwound

24.3 24.5

TRADING PARTNERS RESPONSIBLETotal number of trading partners that have imposed measures that are currently in force and that harm South Africa’s commercial interests

79 79

102 The BRICS Trade Strategy: Time for a RethinkSO

UTH

AFR

ICA

Table 5.10. South Africa’s state measures affecting other jurisdictions’ commercial interests

Summary statistic of foreign state measures affecting South Africa’s commercial interests

All measures



actions

ALL MEASURESTotal number of announced or implemented measures by South Africa

166 130

Total number of South Africa’s measures found to benefit or involve no change in the treatment of other jurisdictions' commercial interests

56 55

Total number of announced measures by South Africa that if implemented would almost certainly harm foreign interests

12 5

Total number of implemented measures by South Africa that likely harm foreign interests

7 7

Total number of South Africa’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

91 63

Percentage of South Africa’s measures that harm foreign commercial interests

59 53.8

MEASURES STILL IN FORCETotal number of South Africa’s measures found to benefit or involve no change in the treatment of other jurisdictions’ commercial interests

55 54

Total number of South Africa’s measures that have been implemented and are likely to harm foreign commercial interests

7 7

Total number of South Africa’s measures that have been implemented and which almost certainly discriminate against foreign commercial interests

84 60

Percentage of South Africa’s measures still in force that harm foreign commercial interests

62.3 55.4

COMMERCE AFFECTEDTotal number of 4-digit tariff lines affected by measures implemented by South Africa that harm foreign interests (maximum 1229)

243 235

Total number of 2-digit sectors affected by measures implemented by South Africa that harm foreign commercial interests (maximum 69)

38 38

Total number of trading partners affected by measures implemented by South Africa that harm foreign commercial interests

153 153

by Simon J. Evenett

What trade policy strategy should the BRICS leaders adopt at their forthcoming summit in Ufa, Russia? In 2014, those leaders and their trade ministers focused on fostering commercial ties, establishing a New Development Bank, advocating steps at the WTO and cautioning that mega-regional free trade deals, such as the Trans-Pacific Partnership, should not harm non-members.

At a time when each of the BRICS’ exports are falling and when only India is expected to see faster economic growth in 2015 and 2016, this report argues that the trade strategy of the BRICS should be rethought. Greater attention should be paid to the unilateral actions taken by governments that limit imports and artificially inflate exports.

Using the latest data from the Global Trade Alert, this report shows that, on average, every day since the Global Crisis began the commercial interests of at least one BRICS nation have been harmed by the imposition of a foreign trade distortion.

Moreover, BRICS trade ministers may want to rethink the wisdom of their excusing protectionism imposed by developing countries on the grounds that their economies are deserving of 'special and differential treatment'. This report shows that 'only' a fifth of the trade distortions harming the BRICS were implemented by the leading industrialised countries. There isn’t much evidence of BRICS solidarity either, as one third of the hits to BRICS commercial interests come from other BRICS members.

The report recommends that the BRICS members show global leadership on protectionism by exercising restraint individually and collectively. This recommendation is backed up by a slew of data on related matters that may be of interest to trade policy analysts, scholars, journalists and international officials.

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